quick question of where you reckon i sit with the bank. i have just finished building a house and the bank gave me a building loan ie payment in stages etc etc.
the contract says that i dont need to pay anything until the house is finished. when the house was finished, and the bank had payed the builder, the bank then notified me that i hadnt payed any interest on the loan during the building period.
i told them i didnt know i had to pay interest as it doesnt say it in the contract and at no time during the 6 months it took to build did the bank chase me for payments. neither did they at the start of the loan period tell me how (what method) i should pay (ie cheque, direct debit etc)
the problem is that others tell me that it is usual that u should pay interest during the building period. i only want what is reasonable and if it is usal to pay interest during the period all i wanted was to be told that and i would have paid everymonth accordingly. except now im left with 6k lump sum payment which i hadnt expected, paying interest on the interest, and i also have a contract saying i dont need to pay.
for what its worth the banker told me that she mentioned to me during the signing of the contract that i need to pay interest and she must have mistakenly left it out of the written contract. the bank is NAB…
any advise ??? should i just cop it sweet because expecting an interest free loan was naive, or should i fight it because they were slack and ive got a 6k surprise to boot??
thanks in advance
Hi
In my experience when building the builder gets a progressive payment, for example when they have completed the foundations.
I don’t think it’s just the bank, you should also check your building contract – the builder may of been getting progressive payments without you knowing.
Basically you should only pay interest on money that you borrow from the date you withdraw/spend it.
So I think one of the following situations occurred
1) Progressive payments – therefore you are liable for the interest on the payments
2) The NAB paid the builder upfront – I don’t think this would of happened but I was once with NAB and I know how dim they can be.
3) The bank is trying it on!
You should be able to get a statement from the bank with reference to the loan account and then you’d see when the money was drawn down – then you could calculate the interest yourself.
I live in Karratha and for a fee find quality cash positive deals there, email me at [email protected] to join our database
We’re with NAB. Some of the staff are great (like fabulous) and some are not (absolutley clueless). Strange at it seems to us it really depends on who you are talking to. Our regular personal banker was on holidays or long service or something or another and the lady that was filling in was a true problem solver. After that we changed our personal banker to someone that was more suited to our needs. You can ask to change personal bankers and it is like changing banks in my experience.
Cheers
SonjaInterest only repayments are normally required during the construction/drawdown period. This is very normal. It would be nice if you could get an interest free loan but it’s not the case.
In my opinion, it was naive of you to think the loan would be interest free. I’m sure the loan documents state that loan repayments were required. Have you read carefully through the terms and conditions? Some documents can be confusing, particularly NAB’s. NAB’s documents do not state the value of interest only repayments in the documents which is really silly.
Do you have a case to get NAB to waive the interest charge? Not in your lifetime!
Should have NAB ensured that you understood the loan terms? Absolutely!
I think a good compromise is for NAB to let you repay the interest over a certain period of time (e.g. over the next 12 months). That will ease the burden a bit.
Hope that helps.
Cheers
Stu
I agree with Stuart. Best thing to do is work out some way of paying with the NAB. Last thing you want is to have a mark against your credit rating after fighting a battle you are unlikely to win!
Cheers
Clare
[email protected]thanks guys for your reply
scotty – yes the bank was paying the builder at the end of each stage. the builder would invoice me and i would tell the bank it was then ok to pay the builder.
sonya – yep i think my personal banker was being a bit slack – so when you have one slacker talking to another (me) thats a recipe for disaster. because she never brought up the idea of interest payments, i never asked. which leads me to my next point
stu – yes you are quite correct i was naive in not checking that i had to pay. and in hindsight this is infact an interest free loan. but hand on heart it never occured to me because it was never said/stipulated, reminded etc …infact they only provided me with the means to pay (cheque book) when the building was complete….
i actually dont want to avoid paying what i have too but i thought maybe they should chip in a bit paying for the interest on the interest. ie because i didnt know my pricipal was going up ewach month and therefore i was paying more interest than i otherwidse would have if i had known to pay the interest as required – if that makes sense??
im just not sure i should be out of pocket for a stuff up in there procedures. we are probably only talking about a few hundred bucks here anyway..
thanks again
cheers
You must be logged in to reply to this topic. If you don't have an account, you can register here.
