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  1. #1
    Join Date
    Jul 2007

    Default The world is roundabout of life lessons

    Upon asking our bank (PSIS) for a settlement figure on our mortgage today I was shellshocked with what I was told.

    I know there will not be any other forumites who even bank with PSIS as you are all astute business people who have already got your life on track with your financial freedom confidently on its way.

    I have only just begun this journey so of course I wanted to be able to budget what our equity was going to be out of our sale to plan our strategy.

    We have been paying the required amount interest+principal fortnightly. The settlement figure given to me was "X" amount which when I did the figures came down to this

    Our mortgage payments over 27 months to PSIS have been close to $52,000 we were about to receive $1,500 off our principal for settlement.

    I would have made more money renting and putting my money in the bank.

    The reason being we had to take out something called Loan Care fund which is a form of Mortgage repayment insurance. We failed to ask for a breakdown of how this is paid back, assuming that it was spread out over the period of the mortgage but no, it is set up so that it is a top up on your loan so not only are you paying extra interest for this amount of money the most of your principal payment for the 1st few years is eaten up paying this loan care fund back.

    When voicing our concern to our Bank Manager (whom we thought we had developed a good relationship with) informed us that we were right with our figures and he was very sorry and even embarrassed. But he was an instigator to getting this process changed about 12 months ago whereby they now request clients to obtain their own MRI.

    I would have thought that there would have been(remembering we had built a good relationship with our Bank Manager) maybe some communication and opportunity to have this loan type changed so we could have had 12 months of paying a little more off our principal.

    Thats my gripe for the day. So our plan now is to engage a Mortgage broker as 1/Psis are personal bankers and do not deal with businesses and 2/Psis would be pushed to get any other loan from us anyway.

  2. #2
    Join Date
    Jun 2005


    Hi whatif,

    Ahhh - the small print. Unfortunately, its not uncommon for lenders to do some interesting things with those early payments- I've heard tales of paying 'extra' interest (i.e. interest that isn't due yet) and even, back in the UK in the 80's, paying the broker's commission rather than the principle.

    Hopefully you'll now be better placed to ask the right questions next time around.

    Good luck



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