We have been sent a loan contract of offer from National Aust. Bank which sets out the margin discount off SVR under their professional package as follows:
The way they have set out the margin discount is
1. Tiered margin discount 0.2%
2. Package margin discount 0.5%for our professional package
On the contract there is a clause which says (direct quote)
NAB can change, without our consent, the interest rate (including any margin, and the name or description of any indicator rate)
We checked with friends who have their home loan with Westpac and they don’t subdivide the discount as above, and don’t have this clause either. I am concerned this means that they can change the 0.7% discount whenever they want…
Unfortunately we don’t know anyone who have loans with nab so can’t verify. Rang the bank and they said that all contracts have this…
Would appreciate any help as we have to sign documents tomorrow!!!
Thanks
Hi bb8
I'm with NAB and we had the same thing in our contract.
Rudra
bb8
It is a standard clause with the NAB as 0.5% is the norm and anything more is by negotiations.
In saying this the 0.7% is available on a loans over 250K whereas with Westpac, Anz, CBA this only kicks on with loans > 750K.
Richard Taylor | Australia's leading private lender
thanks rudra and richard
so does that mean.. if say for example in 2 year’s time NAB’s package discount margin goes from 0.5% to 0.4% then we all have to follow suit, based on that clause that they can change the interest rate including any margin?
i take it that “margin” in this case refers to the discount margin?
if so, then when they say you will get “0.7%” off for the life of the loan, it really means they can change that whenever they want without our consent?
thanks again!
Hi bb8,
Theoretically I think it means they can do that. I'll have to go over my loan documents in the morning and see the exact wording of mine.
Rudra
Although, if you have in writing that you have been offered 0.7% off "for the life of the loan", if the bank later tried to change it, you would have a reasonable argument for a misrepresentation/inducement claim. I imagine that any bank, if confronted with written evidence of the offer for the life of the loan would keep your interest rate at just that.
Cheers
K
Hi BB8
Your loan contract is simply breaking up the discount structure for you, as it is indeed a 'tiered one'.
For example, your Choice package margin is 0.5 %, and the tiered discount margin depends upon the initial size of your loan. You get another 0.2% off for loans in your package over $250k (as yours is) and that would be 0.1% for loans between $150k (altough there is a special on at them moment with loans from $100k ) and 249k.
This is an automatic discount totaling 0.7% in your case, or 0.6% in the other case mentioned. Smaller loans only have the 0.5%. It is just the way it is disclosed, and you get it automatically, without any negotiation.
IT is quite terrifying if you read a loan contract through is'nt it? All lenders can pretty much change anything they want at anytime is the long and short of it! Just as well the aussie banks are all safe eh?All the best with your new house.
Cheers
It's called a "variable" rate for a reason.
Thanks v8ghia. After posting and signing the documents the following weekend while reading magazines at a dental appointment came across an article discussing loan contracts. I think the term was unilateral variable clause ? – basically allows lenders to change anything just like you’ve confirmed!
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