ME Bank query

Discussion in 'Property Finance' started by Lollie, 5th Jan, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    My father's 3 year interest only fixed rate investment loan with ME bank expired 27/12/16. His mobile banker quoted the same product again but at 4.09%, which my father was happy to proceed with. He had to ring ME himself and they told him he should receive 4.09% as the RBA probably won't drop rates between now and when he fixes.

    He received a letter from ME advising a 3 year variable P + I rate @ 5.34%. When he rang about it he was informed that in order to get an interest only loan he had to reapply for interest only, that is, not to apply for a new loan but more so to update credit details. He printed off the interest only application they sent him and completed it with asset, liability and income details.

    Today he received a letter to say they are extending the interest only period with a variable P + I Loan @ 5.34%. What does this mean?

    His mobile banker is on holidays, he's left him a message and is waiting to hear back.

    My father wants to know if he would be able to get his 3 year fixed int only investor loan at 4.09%? He is 73 years old, semi-retired and his rental income is a large chunk of my parents' living expenses, so keeping loan repayments to a minimum is crucial.

    Any advice is appreciated
     
  2. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,770
    Location:
    Remote
    they are extending the interest only period with a variable P + I Loan @ 5.34%.

    This doesn't make sense. It is not an IO loan if it is PI.

    Get him to give them a call. I suspect it would be difficult for him to extend the IO period given his age.
     
  3. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    I wonder then why his mobile banker didn't tell him this.
     
  4. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,770
    Location:
    Remote
    It could be possible, I don't know his circumstances.
     
    Lollie likes this.
  5. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Private Lender Business Member

    Joined:
    20th Jun, 2015
    Posts:
    292
    Location:
    Brisbane
    Maybe he is on the sales side of the Bank and Credit will have a different policy.

    Hope is able to do what he wants.
     
    Lollie likes this.
  6. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    Yes, that's probably the case. He'll call the bank tomorrow.
     
  7. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    Given my father's age, would there be any chance of a refinance to seek a better loan product? Would it be worth him going to a mortgage broker?
     
  8. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,770
    Location:
    Remote
    Whats his income like and what is his 'exit strategy'?
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,165
    Location:
    Melbourne, Nationwide
    They could be quoting the P&I rate after the IO fixed rate expires?
     
    aussieB, York and Terry_w like this.
  10. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    I thought that too! He read the letter to me over the phone (we live 6 hours away from each other) there was a lot of reference to periods of IO and PI that I found confusing. Hopefully a phone call clears it all up in favour of IO.
     
  11. tobe

    tobe Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,490
    Location:
    Melbourne
    Get him to txt you a photo of the loan docs. Should sort it out.
     
    Lollie and Perthguy like this.
  12. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,770
    Location:
    Remote
    he is 73!
     
  13. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    Don't know exact amounts but income is from self-managed super fund, rental income outside super and about $12,000 pa as a technician. He is probably already exercising his exit strategy. My parents have enough income to live on and enjoy life, have no plans to sell any property and have heaps of equity.
     
  14. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,770
    Location:
    Remote
    Some lenders actively discriminate against 'older' people - even those younger than your dad. Some may shorten loan terms, others won't.

    I suggest he contact a broker.
     
    Lollie likes this.
  15. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    He can do it, he's tech literate, although email preferred for docs, so I'll get him to send it via email and I'll have a good look.
     
    Terry_w, tobe and Perthguy like this.
  16. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    Thanks Terry! I'll get him to have a chat with a broker.
     
  17. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    8,976
    Location:
    Perth
    My parents are older than that and they MMS me photos all the time
     
    Lollie and Terry_w like this.
  18. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    It doesn't help that my father prefers to own the cheapest phone possible.
     
    Perthguy likes this.
  19. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    8,976
    Location:
    Perth
    But he can scan and email, so that's good
     
    aussieB likes this.
  20. Lollie

    Lollie Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    100
    Location:
    NSW
    ME said there must have been a computer glitch which caused the incorrect document to go out for signing. That rate doesn't seem to exist anymore on the ME site so hopefully they honour it.
     
    Ethan Timor and Perthguy like this.