I am writing this in an angry state so if it comes out in the post please be aware.
My sister and her husband recently joined forces with my Mum & Dad to purchase a property, paint it, cleant it up etc , then sell it. Hopefully for a tidy profit.
They used a LOC as an interim loan until the place sold. They were told – get this – that they did not have to make payment on the loan! Being the conscienteous (sp?) people that they are, they asked again just to make sure, and again they were told in the negative – no they did not have to make payments.
Anyway, a new manager comes along, and then informs them that yes indeed they have to pay on the loan. The problem is that my sister has not made allowances for this, and now they are in trouble as the bank has demanded that arrears are made up. the house is now on the market, and I beleive my sister is not going to get the full benefit of investing this way as they will probably have to sell the house for less than they want.
Is there in the realms of possibily a case to be answered, lawyer-wise? Could my sister ask for recompensation or similar because they initially were told wrongful information? I feel so annoyed for my sister. Damn was I happy when she told me of the plans for the house. Now am so ******* annoyed. I wish I could help.
Any ideas?
Cheers
“Looking forward to the day when I can tell the boss where to go”
I thought the whole idea behind LOC is that you pay the amount back at your own leasure? Interest will always be charged and added to the full amount of the loan.
I can’t see how the bank can ask for ‘arrears’ when the dynamic nature of the loan would continually show interest accruing on it.
Depends. Some LOCs allow interest to be capitalised up to your limit, others require monthly payments of at least the interest.
Myydral, it is not that bad is it? She would have had to pay the interest anyway. I don’t think there is anything you can legally do, as the terms of the loan would be in the orignal loan contract. Just remember, don’t trust anyone – get everything in writng.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Just remember, don’t trust anyone – get everything in writng.
One needs to take it one step further i.e. read
and understand the agreement – before, not after.It stands to reason that interest is due for the money which is drawn.
That can be capitalised provided there is some undrawn money left in the overdraft account.
I am not pro banks but I think the heading of this post is unfair.
The problem more likely than not appears not to have been caused by the bank so much as because of the borrower’s misunderstanding of the conditions of the agreement.
Pisces
Myydral I too was told that we didn’t have to make any repayments on our loan until my second property was finished in construction. We are in talks with the banking ombudman at the moment although our case is a bit more extensive than yours (refer to my post under the finance board – ‘desperate help needed’)
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