2016 - 2017
Ms. N took out a home loan with an interest rate of 6.59% fixed for two years. As an incentive, the bank offered a $1,500 cash contribution – on the condition he paid it back if he did not keep his loan for at least two years. Ms. N accepted the cash contribution.
Eighteen months later, he sold his home and signed an agreement to buy another one. To complete the purchase, he needed to borrow an extra $150,000 from the bank. After shopping around, he found a bank offering a two-year fixed rate of 4.19%. It was also offering a $2,000 cash contribution. He asked his bank if it could match the offer. The bank said it could offer the same rate but not the cash contribution. He said he would accept the bank’s offer.
The bank drew up a loan document for a $150,000 loan at 4.19% for two years. When Ms. N questioned why the loan was for only $150,000 and not the balance of the existing loan as well, the bank said he would have to break his fixed-rate loan if he wanted all his lending at 4.19%. It said this would mean repaying the cash contribution and paying a break fee.
Ms. N complained to us that the bank had led him to believe he could have all his lending at 4.19% without incurring any of the costs of breaking his fixed-rate loan. We reviewed the correspondence between him and the bank and found nothing to suggest the bank would waive those costs. We also found that his loan documents and cash contribution acceptance form made clear he would incur costs if he broke his loan early.
We therefore could not uphold his complaint.