NAB loan repayment reviewed upwards

Discussion in 'Loans & Mortgage Brokers' started by Geekyebony, 2nd Jul, 2019.

Join Australia's most dynamic and respected property investment community
  1. Geekyebony

    Geekyebony Active Member

    Joined:
    12th Nov, 2017
    Posts:
    30
    Location:
    Melbourne
    Hi Guys,

    Can somebody please explain to me whats going on. I just received a letter from NAB saying they are just writing to let me know that there is an annual review of my home loan account and the repayments needs to increase by about 30 dollars a month.

    I thought with the RBA rates going lower recently, we were actually supposed to see a reduction in the monthly repayment ? Also, they gave no reason apart from the fact that there was an annual review.

    Is this the standard practice of annually reviewing upwards ? i have just had this loan with NAB for about a year.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,669
    Location:
    Australia wide
    What else did they say?

    Is it a commercial loan? Residential don't usually have annual reviews.

    Perhaps you were paying an amount that was slightly less than the minimum required amount to pay the loan off in time and they had only realised this when recalculating repayments with the recent decrease.
     
  3. Geekyebony

    Geekyebony Active Member

    Joined:
    12th Nov, 2017
    Posts:
    30
    Location:
    Melbourne
    Its a Residential loan - NAB Base variable rate home loan.

    In their exact words

    We're writing to let you know that following the annual review of your home loan account, your repayments need to increase

    new repayment amount: xxxx
    repayment frequency: xxx
    next repayment: xxx
     
  4. essendonfan

    essendonfan Well-Known Member

    Joined:
    27th Mar, 2019
    Posts:
    137
    Location:
    Sydney
    What is the frequency set at? Perhaps they have recut the repayments based on a new fortnightly repayment for the year?
     
  5. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,394
    Location:
    Sydney
    I've had repayment rates reviewed upwards in the past - basically, they look at how long you've got left on your loan, what your current rate of payment - and then adjust slightly to ensure that your loan will be paid out in full by the end of the loan term.

    Not surprised that they've had to adjust yours after the first year - it's just fine tuning.

    I wouldn't think there will need to be any further adjustments until interest rates start increasing again (although if rates keep dropping further, you may end up being ahead in payments - which is not a bad thing).
     
  6. Angel

    Angel Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    5,813
    Location:
    Paradise, Brisbane
    Our letters from Nab's subsidiary lender last week didn't adjust any repayments, but mentioned that the amount available in the redraw facility would reduce in time so as to ensure the loan would still be paid out by the final date. Customers in the bad old days of easy credit used to draw it out for big ticket spends which has contributed to the huge debts in Australian households over the recent decades pre GFC.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)
    Suggest its because there is or was some redraw there and to make sure the loan completes in the contracted period

    ta
    rolf