Hi my mortgage was a fixed rate interest only with perpetual trustees Vic ltd, in the mortgage document it clearly stated lenders early repayment loss (break costs) as 2.5 times the monthly repayment equalling approx $6000,
I sold the property last week and they charged me additional final break costs of $16,250. so total break costs of $22,250. I’m ok to pay the $6000 but the additional $16000 was clearly not in the mortgage papers and in addition when I took the loan out the broker said the break costs would only be the $6,000. If I had known I was up for $22,000 I would not have sold the property as the fixed term was due to expire in 18 months
I noted the mortgage documents also states there are additional terms and conditions in the loan terms and conditions booklet which I do not have a copy of which may contain some sneaky clause so
1. Does anyone have a terms and conditions booklet from Victoria trustees Ltd printed around Feb. 2007 for fixed rate / interest only loans
2. Can anyone suggest a suitable course of action or any lawyers who could help?contact the banking Obudsman
The mortgage brokers may correct me on this but I think that if you discharge a mortgage early, there are two lots of costs:
1. deferred establishment fee or early discharge fee, which is normally a percentage of the loan amount,
2. Break costs, which is the difference between what the lender would have gotten if you had stayed in the contract and what it actually got due to you breaking the contract,. In short, this is the loss incurred by the bank because you broke the contract.
Think of it this way. You grow tomatoes and you enter into a contract with a supermarket chain who wants to buy your tomatoes for $1.00 per kilo. This contract is for three years. 18 months into the contract, there is a tomato glut and the supermarket decides not to buy your tomatoes any more because they can get them from another grower for 50c per kilo. You, as a grower, are left with all these tomatoes and you are not going to get the money that the supermarket chain promised you. You are therefore able to sue the supermarket chain for the money you would have received if the contract had continued.
In the same way, the bank is able to claim from you the amount of money it loses because you have exited the contract. Now the bank can only lend that money at a lower interest rate than it loaned you the money so it has incurred losses. It is these losses that it has claimed as part of the discharge of your mortgage.
You could go to see lawyers or the ombudsman but I expect they would tell you that there is nothing you can do, unless you can prove that you never got the document that contains the clauses about break costs.
Arguably you could sue the mortgage broker for damages because of his/her negligent advice, but at the end of the day, mortgage brokers are not financial advisers and it would be unlikely that a court would find that the morgage broker is liable.
Good luck though
Cheers
K
Before taking your complaint to the COSL you must first of all try to resolve your complaint with the Member concerned.
Visit this web site first to understand the complaints process
http://www.creditombudsman.com.au/4518,01,1-0-Complaints+Process.php#N102FEContact the mortgage broker and ask them for contact details of their Complaints Contact Person
Then contact this person and ask them why their mortgage broker did not disclose the additional $16500 break costs to you when you took out the loan through them. Also mention that through their non disclosure of the additional fees that you have suffered financial damages through not knowing about this additional fee and from selling your property . Ask them to rectify this complaint.If you do not get adequate completion of your complaint then lodge a complaint at this web site.
http://www.creditombudsman.com.au/check if the broker is a member of COSL
by http://www.creditombudsman.com.au/4522,membersdb,1-0-SearchMembers.php
If you are buying another property you may be able to transfer the security of the loan to the new property and keep the existing loan and avoid the break costs. Worth inquiring about with perpetual or the complaints contact person.you might find page 10 and 11 of this page useful
http://www.cosl.com.au/asset/COSL%2520Guidelines_21%2520February%25202007%2520Final.pdfYou may consider your position bad luck or unfortune but I would say that if you hold that property for another 18 months the selling price will be 22K plus lower than what you have achieved. So consider yourself a lucky man for selling for that price and for selling at all.
They are so many and many people trying to sell properties everywhere in Australia that the market has clogged and the prices are dropping fast.
Clones
Sounds like this a a charge for breaking the fixed loan. It would be in the agreement you signed somewhere.
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
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