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  1. #1

    Default How can I get bank to leave a mistake they made as is good for me?

    Hi forum, I'm not active on the forum reason I think am not much into property investment but I do follow the forum.

    I have a question I would like ideas and advise on. Seven years ago, I started well on property as I bought one house I lived, with mortgage from A bank. After about two years I had enough equity to buy a rental property for retirement (It's on guaranteed rent with HousingNZ but I have to top up the rent to pay the mortgage for about $500 fortnight) with same A bank.

    Unfortunately 2 years later I lost my job and having to pay 2 mortgages with wife studying, no income, I jumped into business. 2 months later I got another job but starting low (about 3/4 of where I was). Then wife insisted I must return to job and sell the business but couldn't get it sold, so liquidated it and went into debt of about $150k. Since 4 years ago, we have been battling with the debt, sold the live-in house December 2014 and since, renting to cut costs. Wife stopped schooling and working but only got casual and we have only paid the debt down to about 40k which are with about 5 different credit and store cards costing between 25% and 30% interest rates. I have withdrawn close to $20k from my kiwisaver to get to that level.

    Wanted to sell the rental house but no luck yet or at the price we were looking (looking to be able to pay off the debt and have deposit to buy another house to live in) but unfortunately the property price has jumped by more than 30% in Hamilton since Dec 2014. No bank was ready to listen as I tried to consolidate the loans into my mortgage or personal loan at a lower rate, not even the bankA that we have the rental property with; no mortgage broker thought there was any chance.

    I moved my income to another bank B and was paying all the debts from there such that every pay is going on bills and debt payments. Few weeks into December same bank B sent me a letter offer CC with zero fee and 2% interest on balance transfer. I was reluctant to approach them but I eventually approached them specifically asking them for a CC to transfer the debt balance of about $7.5k that I have with bank C which is annoying because they charge me interest rate and protection fee that is every close to the automatic payment I set up on the card, so the debt stayed stagnant despite the regular AP.

    To my surprise the bank B approved a CC of $8K limit and transfer 95% of my balance. I was so happy. Within 2 days again, I logged into my account and saw they the check account I have with them where my income goes has been changed to a facility of flexible home loan with limit of $30k at 5.7% interest. Initially I thought it was a mistake, then later I thought it was a miracle because I believe in miracles. Then I thought what could I do, then I used the limit to pay off all the credit and store cards thinking the bank saw my account anyway that all my income was going to paying debt and bills so, may be they wanted to help me with consolidation even though I didn't ask them because I know I wouldn't qualify for that.

    Unfortunately after a week, the local branch called me to ask how did I get the facility and I said I didn't know. they said I have to pay back all the $30k because it was a mistake from their 'back office' as I didn't have mortgage with them. I got sick psychologically since then, but just kept quite and hoping for the best, I went into the branch to see them though not knowing what to say and decided not to say anything, the store manager emphasised it was their mistake but they must fix it with a personal loan. they said they would work hard within maximum of 2 days to get their loan team to approve a $30k so they can withdraw the facility. More than 1 week passed and I didn't hear from them. After almost 2 weeks they came back with an offer of $38K personal loan with 18% interest rate to pay till 2022 and I begged them that I have canceled all credit and store cards and that at least $1k will be left in my account every fortnight; (one fortnight has passed and they saw about 1.3k left in the facility after i paid bills) meaning I will pay the facility quickly at the lower interest rate. Also, am happy to move my mortgage to them but just that am fixed rate with Bank A till sept 2017 when I can move it so I don't get charged breaking fee. The branch manager insisted no, that I must come and sign the personal loan within next 3 days as the only option they can offer. Meanwhile 1 day earlier, their 'back end' officer sent me a letter to increase the interest rate on the facility from 5.7 to 5.8%. I was confused, as I don't want to argue with the store manager that it was their mistake but I wish there's anything I could do to get the manager change his mind and leave me alone as this facility will help me to pay off within 1.5 years at most at a lower interest rate. Sorry for the long story but I just want an informed advice or idea if anyone out there has one. thanks

  2. #2
    Join Date
    Oct 2013
    Posts
    1,621

    Default

    As far as I know, there's nothing you can do on the flexible facility. The bank has the right to take that away whenever they want, and demand repayment.

    There are credit cards that allow balance transfers at a low rate, 0-5%. Get one of them for as much as you can pull together, and continue to pay it down as hard as you can.

    Your debt is an emergency. But it sounds like you already know that. Get a second job. Eat cheaply. Rent out a room in your house. Anything to get extra income to kill that debt.

    Talk to your first bank with the mortgage, let them know you're in financial hardship, they may allow your loan to go interest-only for a few months. But it's imperative you funnel anything extra into that debt.

    The personal loan at 18% is better than you'll pay on a credit card.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  3. #3

    Default

    relieving to hear this. much appreciated

  4. #4

    Default

    If you believe in miracles the fact that you have been approved for a personal loan with that history is definitely a sign that some deity is looking out for you.

    September is only 8 months away, if you want you could wait out the personal loan and refinance. Really a break cost is the least of your worries here though - why not just move your mortgage right now? Strong chance interest rates will be higher when you go to refix.

    I'm really not seeing the bank keeping that facility open and if you want to fight them it will be escalated and will not end well.

  5. #5
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,675

    Default

    Quote Originally Posted by Anthonyacat View Post

    There are credit cards that allow balance transfers at a low rate, 0-5%. Get one of them for as much as you can pull together, and continue to pay it down as hard as you can.
    BNZ currently offer a 0% balance transfer for 12 months.
    My blog. From personal experience.
    http://statehousinginnz.wordpress.com/

  6. #6

    Default

    breaking cost will be about 10k, they told me

  7. #7

    Default

    Quote Originally Posted by samsinclair View Post
    breaking cost will be about 10k, they told me
    Interest rate must be quite high as well then. Have you calculated your saving based on a lower rate?

  8. #8
    Join Date
    Jul 2005
    Location
    Christchurch
    Posts
    735

    Default

    You need to talk to the banking ombudsman as well as your lawyer. The bank has made the mistake and is now penalizing you for it. I would then contact the bank telling them you won't sign anything until you have recieved advice from the ombudsman and your lawyer.

    You may have acted wrongly to use the money in the first instance knowing it wasn't what you asked for. However, the bank has a duty of care also. Play hard with them. You need to regain the control.

  9. #9

    Default

    Quote Originally Posted by Wellington Broker View Post
    Interest rate must be quite high as well then. Have you calculated your saving based on a lower rate?
    No, I dont know how

  10. #10
    Join Date
    May 2004
    Posts
    2,796

    Default

    Quote Originally Posted by Monkeyboy View Post
    You need to talk to the banking ombudsman as well as your lawyer. The bank has made the mistake and is now penalizing you for it. I would then contact the bank telling them you won't sign anything until you have recieved advice from the ombudsman and your lawyer.

    You may have acted wrongly to use the money in the first instance knowing it wasn't what you asked for. However, the bank has a duty of care also. Play hard with them. You need to regain the control.
    I agree with this, and if nothing else you will get a reprieve on the timetable until the complaint is resolved. Link below. You have to complain to your bank first. Not quite clear to me that what you outlined constitutes a complaint but it probably does. The Ombusdman holds the complainant to a lower standard of reporting than the bank.


    http://ifso.nz/


 

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