Does your bank understand you?
Recently I received a call from a distressed client. His in laws were in financial strife and their bank of over 40 years was pressurising them to pay off the loans or their house would be sold. I will explain this in detail a bit so that you understand.
Husband(57) and wife(56) had been with their bank for over 40 yrs. They owned 2 properties (Owner occupier home, Value $630,000 and Investment property, Value $620,000) The bank had lent a total of $210,000 across both properties. The husband had lost his job a year ago and was off work for about 4 months. He had since then found permanent work and was trying to manage his finance. The wife was a qualified teacher but was struggling to find some relieving work. Due to their circumstance, they had gone into overdraft on their current ac by approx $12000. The bank was putting them under immense pressure to pay and clear the overdraft.
This was putting the hardworking couple under tremendous stress. When I met the wife, she was in tears and explained how they had refrained from eating out, cutting out on basic food needs and tried to pay the exorbitant interest that was being charged on the Overdraft.
I presented them with a solution that would put them right back into a very comfortable position. I refinanced their existing loan with a non banking lender and got them $275,000 secured over just the investment property (This freed up their own home which now remains with no mortgage) for 2 years. There was a provision in the funding for 1 year worth of mortgage repayments in addition to the rental income so that there was no more pressure for meeting mortgage commitments for a year till such time that the husband is able to save enough money thus creating a buffer for the future. The wife now is relaxed and can look for a decent job in her own profession of choice rather than being scared and stressed and as a result failing interviews due to the lack of confidence.
We will also review their situation in the next few months and as everything will fall back into place, move them over to a first tier bank which will provide them better customer experience, understand and respect them.
But do we not all deserve this from our banks? Are they not our first point of contact?
I hope this helps you understand that maybe it is time to make your trusted finance advisor your first point of contact rather than the bank. Unlike most of them, we do not go by the book. We do not treat you as a number.
We understand you and look after you.
Have a great day.
Westpac Weekly Commentary 16.05.2016
On the sidelines
Last week’s Financial Stability Report put the run-up in debt (both households and dairy sectors) firmly front and centre. While no new lending restrictions were announced, the RBNZ is clearly mulling over its options. That’s no surprise given rampant credit growth and ongoing broad-based strength in the housing market. We think the RBNZ will feel compelled to leave the sidelines and impose further lending restrictions on banks before the year is out. Read more.…
Mortgage wars: Banks prune interest rates
Sharper offers reflect expectations OCR will stay put this year, say economists.
Banks have started cutting interest rates as the busy house-hunting season heats up.
From today, mortgage holders and prospective home buyers with at least 20 per cent deposit are being offered a three-year fixed home loan rate of 5.59 per cent at BNZ, down from the bank’s previous three-year rate of 5.99 per cent. Kiwibank also cut its two-year rate by 20 basis points to 5.55 per cent. According to industry experts, consumers should expect better deals from other major banks soon.
The lower rates could cut years off some mortgages, saving homeowners thousands of dollars in interest repayments.