Urgent: BNZ advised standard rates dont allow for extra repayments, does anybody?

[OnTheMove]

It seems the cost of either revolving credit or extra repayments adds 1% to our low 3.5% interest rates with BNZ.

Do any banks allow extra repayments without such heavy charges?

[Koko]

From expereience i do know that ASB does allow an increase to regular ongoing loan repayments (on a fixed term loan) by up to $1,000 per month or $500 per fortnight in line with current payment frequency without incurring ERA charges.

[donna]

I thought the purpose of RLOC was that you can pay back any amount - including the full amount whenever you want.

cheers,

Donna

[Learning]

My BNZ online banking allows me to increase or decrease regular mortgage payments as I please. There's a small fee for increasing payments, the size of which depends on the size of the increase and the time left on the fixed rate.

[sidinz]

I thought RCs were always at the floating rate?

[Lanthanide]

People have misunderstood the OP's reference to a revolving credit.

They appear to currently be on a 3.5% fixed interest term, which doesn't allow early repayments without a fee. If they wanted to move to a mortgage structure that allowed unlimited repayments, eg a floating or a revolving credit, their interest rate would go up by 1% to 4.5%. They are not saying that they currently have a revolving credit mortgage.

To answer OP, I am also with BNZ. Yes, their 'Classic' special fixed mortgage rates don't allow early repayments without an early repayment fee. That is, you can do an early repayment but you'll have to pay an extra fee for it. I expect that pretty much all banks will be the same on this point for fixed terms. Floating and revolving credit mortgages allow early repayments without early repayment fees - that's the benefit you get in return for the higher interest rate. In the online banking you can increase your normal repayments fairly easily, but you'll be charged a one of fee for doing so which is an early repayment fee, and as said by Learning the size of this fee will depend on the increased repayment amount and the length remaining on the fixed term.

BNZ do have a fixed term product called 'Standard' where you can make early repayments of I believe up to 5% without paying an early repayment fee, however I can't actually find anything on their website anymore that says what the payment threshold is. The interest rates are about 1% higher than the 'Classic' specials they offer, though.

At the end of a fixed term, before you renew for another fixed term, you can make lump sum payments without an early repayment fee. You can also increase your repayments (effectively shortening the length of you loan) without having to pay an early repayment fee. If you're wanting to make a large repayment, it may be better to wait until the end of your fixed term before making the lump sum payment so you don't get hit by an early repayment fee. You could keep the money in the highest interest bearing term deposit until the end of your fixed term.

I thought RCs were always at the floating rate?

The base interest rate is the floating rate, yes, but your bank may offer you a discount off of that rate (with terms saying they can remove the discount at any time at their discretion). I've got a 1% discount off the floating rate for my offset mortgage.

[xsfat]

With BNZ, you really have to negotiate everything before you initiate or move your loan to BNZ.
As mentioned above, BNZ has a fixed term loan which allows an extra 5% repayment without any fee or cost.
However, the board interest rate for this product is slightly higher. But you can negotiate.
Same goes for revolving credit, you can negotiate for a discount. The best time is before you initiate or move your loan to BNZ.

With some other banks, such as Kiwibank, they also allow an extra 5% repayment without any fee or cost.
The good thing is you don't have to negotiate for this, as it is a standard item.

[McDuck]

Yes,

The banks have made different products and priced them accordingly.


So they made a cheap product, but it was less flexible.

Then they made more flexible product that costs a bit more.


Just goes to show how much they understand money, and how much they intend make from you.

They want to make a specific amount one way or another.


Theirs is a really long term vision.


I still can't figure out what they are charging us for though.

it seems an awful lot just to alter a number on a computer ledger each week.

Basically just shifting a few bits of data around.

The sort of thing this computer, I'm writing on now, just did a thousand times, to write this line.

Oh well.

[Lanthanide]

I still can't figure out what they are charging us for though.

it seems an awful lot just to alter a number on a computer ledger each week.

Basically just shifting a few bits of data around.

The sort of thing this computer, I'm writing on now, just did a thousand times, to write this line.

Oh well.

It only seems like they're not really doing anything because they're doing a good job of it. If they were doing a bad job, we'd be having big public scandals each year (embezzling, rorting, getting government contracts for things, giving loans for clearly dodgy businesses that go under at big losses for everyone involved etc) as well as bank failures every few years.

But because they are doing a good professional job, that stuff doesn't happen. But it's not like doing a professional job can be naturally done easily without effort - after all banks are primarily comprised of people and a lot of people are idiots (think about how stupid the average person is, and then realise that half of everyone is even stupider than that). Ensuring that things are consistently done correctly and professionally is a difficult job. One of the hardest things in business is making it look easy.

Now, that's not to say that I don't think banks are earning huge profits much larger than they should be, because they are. But to say they're not doing a difficult job is just wrong.

[Learning]

With BNZ, you really have to negotiate everything before you initiate or move your loan to BNZ.

Yes! This is so true. BNZ has been my main bank for years. I just like them. But at refixing time I have to work hard. BNZ has never been first to offer me the best deal but they've always matched it. Now I don't bother dealing with the home loan team but instead find the best deal with some other lender and then go straight to the BNZ retention team to negotiate refixing.

[McDuck]

Yes! This is so true. BNZ has been my main bank for years. I just like them. But at refixing time I have to work hard. BNZ has never been first to offer me the best deal but they've always matched it. Now I don't bother dealing with the home loan team but instead find the best deal with some other lender and then go straight to the BNZ retention team to negotiate refixing.

Nice!

That works with quite a few ongoing service providers also.

Pity you can't do it at your local supermarket or dairy.