4 years ago I got a RAMS home loan. It was a good deal and I was quite happy at the time. About a year into it, Westpac bought RAMS but not their portfolio of mortgages, so Westpac effectively acquired the branding only and an agreement that the old RAMS company could not sell new mortgages for a fixed period (several years). No one in that portfolio (including me) agreed to that. We were all effectively transitioned out of RAMS and into a company that could only generate revenue by farming existing clients. So anyone getting a RAMS mortgage under Westpac are actually with the real RAMS and have no idea what previous RAMS customers have gone through. So in this instance, it is absolutely 100% the banks fault that mortgagees are in this situation. RHG passed on about 60% of the series of mortgage drops that occurred during the GFC, and are passing on 100% of all mortgage rises. Based on all this I now want out. I literally just got off the phone to RHG which I learned that it will cost me $990 to discharge the variable portion of my mortgage. They are sending me a letter to let me know how much the fixed portion will cost to exit. Apparently they cant e-mail and I was also told that I can't rely on that information as it may be more when it goes to the panel of solicitors. Based on this thread, I am confident that I am completely screwed and will have to see out the remainder of the fixed period.
There is a question here of legality. How can RAMS/Westpac transition existing mortgagees into a different company and effectively line them up to be exploited? Are there any legal boffins out there that can comment?
Sorry, Can someone please explain to me. RHG is the old RAMS that went bust isnt it? Westpac now own the brand RAMS? So is RAMS anygood now or should i quickly be looking for another lender before for my house?
Thanks,
I would be asking what are their exit fees like?
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
They say its
early repayement fee years 1-3 = 1%
Discharge fee $295 (plus costs)So does that mean for eg loan 300k to get out in first 3 years its 3000+295+costs…..not sure what costs are?
Yep.
Why not just use a major bank?
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
Major banks aren't much better, i got royally screwed by westpac when i refinanced my mortgage.
majors are usually around $900 to $1000 – unless fixed loans. My recent westpac loan was $900 exit fee – or $1000?
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
i orginally wanted to go westpac as i bank with them but they would not lend over 240k in mt isa after GFC. So i tried looking for a place that would do 95% LVR with LMI Capped as i dont have a massive deposit. RAMS was the only one i found i didnt need to be signed up with to go through and not alot of places doing 95% lvr with capped lmi.
I think the distinction everyone has to make, is the break fees are enormous in the early years of a mortgage – it doesn't matter how much you've drawn down a mortgage, with RHG, it's a % of the original loan amount, and how long you've had the loan for.
My wife had a RAMS>Westpac>RHG Home Loan and was paying 8.19% on a variable in 2008 (that's right, 2008) before I spoke with RHG (and no it wasn't a no-doc, lo-doc). At one stage the break fee on a $220K loan was $8,000 – obviously prohibitive.
I tried again 14 months later, and the break fee was $1300. We re-financed that loan to 6.49% to a Top Tier bank.
People are leaving RHG in droves.
To clarify, RAMS was purchased by Westpac around 3 years ago. What WBC purchased was the brand and the franchise network. What WBC didn’t keep was the existing loan book which, other then any loans that they sold off, become RHG loans. The majority of the products that become RHG had early repayment fees during the first 3 years which should all be coming to an end within the next couple of months. This of course doesn’t include fixed rates or several products which have a 5 year ERF. Generally speaking it is 1% of the amount borrowed. In regards to how the customers were treated, the loan book remained with RHG who really are the old RAMS (other then what they sold off), and all that WBC took on was the name. I feel for any customers, much like the Wizard customers that went to GE, who ended up being a captive customer base. The information that I have received is that the National Credit Act that become effective on 1st July non-bank lenders, and will be in play 1st January 2011 for banks should change the way early repayment fees are calculated. To give you an idea, RAMS (who are already under the National Credit Act) changed their ERF’s in July:
- Loan discharged in Year 1: ERF capped at $1,600.00
- Loan discharged in Year 2: ERF capped at $1,100.00
- Loan discharged in Year 3: ERF capped at $600.00
There will be no ERF charged in years 4 and 5 for any products with an ERF calculation that currently extends beyond 3 years I have spoken with RHG and also received in writing that they are still charging ERF’s as per prior to the new legislation.
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