Is there a way to double check that the interest payments that the bank takes are correct?

Hi there

I have always taken at face value that the loan repayments taken by the bank have been correct

but is there a simple way or is there a external provider I can pay who can go through my records to see if there has been any mistakes

With the loans without offset accounts it simple to check but the loan with offset accounts it difficult as the amount changes on almost a daily basis as we use it as a day to say account

I appreciate any help or advice

 

Just work it out in excel for a few months to test it out.
There used to be spreadsheets available for purchase. but prob not necessary.

 

Work out your daily rate of interest eg bank charges 2% pa, daily rate is: 2%/365 days = 0.0054794521%

If repayment is due on 10th of month, then it's 10 x opening balance + (18 or 19 or 20 or 21 days depending upon days in the month) x balance after repayment.

 

I do this in Excel, the easiest way to explain it would be to list all of your daily closing balances for the month in the first column, then in the second column multiply the first column by the daily rate (annual rate / 365, so for 1.9% it would be "closing balance * (0.019/365)" ). Then sum the values since the last interest payment was deducted. Note that the "closing balance" would need to be the effective interest balance, which would usually be the loan value - offset value. Mine are always within one cent (rounding error) of what the bank calculates.

Note that for many (maybe all) banks the daily rate is the annual rate / 365 even for leap years, so the bank essentially gets a slightly higher annual rate those years (I initially tried dividing by 366 and was out, and eventually found this specified in the contract).

I have found mistakes made by the bank. It was a bit painful to get them to even look at it as they seem to just assume that theirs was right and my calcs were wrong. They told me to email them the calcs and wait 2 weeks, but they never replied. I chased them up again by phone and a couple of days later they rang me to tell me that I was right and they would credit the account (a few hundred dollars).

I've setup a massive spreadsheet showing my loan and offset balances across multiple accounts and estimated the incomings and outgoings for the life of the loan. Every so often I update the recent entries to reflect the actual values, so it ends up being half record / half forecast. I can then make adjustments like changing rent, or withdrawing to buy another property and can see what impact it will have long term.

 

I guess the question is more time vs benefit, I don`t think you`ll ever find thousands of dollars in mistakes.

 

It seems to happen though. ANZ sent me a cheque of a few hundred dollars even if my loan account had been closed for a few years. I am however not sure what triggered this, internal audit or external action, but it does happen more often that we would think.

 

From time to time it is detected and the bank then refunds multiple customers through a interest adjustment. Pretty rare though. I did have a client who had a fixed rate reduction never applied. It was detected when that fixed rate loan ended....3 years later. We had to amend a number of returns as the interest was deductible for a property and there was a ATO overclaim. Bank even paid for the amended returns when pushed on the issue.

 

A few years back there were company's flogging some kind of software that did this.

 

I just get my accountant to check. About 10 years ago I got a refund from St George, about 3 years ago I knew it was wrong and had an argument with WeSuck they insisted it was correct because of some ******** in the terms and conditions, about a year later a refund check turned up as their was an enquiry and the regulators forced them to. About 20 yrs ago ANZ was overcharging me the regulators were useless the only way I could prevent it was move to another bank. It took 18 years before regulators took action. People were getting screwed for decades most have no idea though. It is why I never invested in banks as they are unethical. and their returns are poor since being held more accountable.