So got an email from CBA today stating they will be lowering my home loan repayments to the lowest minimum required. No ifs or buts. Automatically going to happen and cannot stop it. To change it back I have to contact them 5 days after that fact…
Yes I know it's a simple thing to do (I hope it is in my case as it's in a joint name and I don't have contact with the other party), I just find it annoying and frustrating that they are making this choice for me and every other customer.
Indeed makes and ABSOLUTE MOCKERY of this announcement a two years ago. It's a shameless cash grab while the RBA cash rate is at rock bottom.
https://www.commbank.com.au/banking/changes-to-loan-repaymen…
What's changing?
From 31 July 2018, your minimum required repayment amount may be adjusted when:Your interest rate is reduced
You make an additional repayment
How it works
Tim’s loan has a minimum monthly repayment amount of $580. He makes an additional repayment of $5000. Soon after this, his minimum repayment amount is recalculated to $440.What it means for you
You will be able to see your new minimum repayment amount in NetBank
You can choose to reduce your repayment to this amount if you wish to in NetBank
These changes apply if you have a variable rate principal and interest home loan, investment loan or personal loan
This kind behaviour is disgraceful
Westpac did the same to me. Can easily change repayment amount on line though.
I can't. And the bigger point is lots of people probably don't check their email or check their repayment amounts.
I think this is the trickiest bit of it, the email is the sort of thing I would have normally ignored. We are trying to smash our mortgage now my wife is back from having the kids, not happy about this or the way they have gone about doing it
Can you not just keep it in your offset account if you have one, then they cant take interest on the full amount only outstanding less the offset
@sagrules: We don't have an offset with our product, halfway through Reno so not in a position to change right now
I tried today to ring them and was on hold for over an hour and didnt get through before I had to go to work…
Weird they didn't for me. I wonder what the conditions must be to automatically be dropped down.
Morons, they could have just reiterated that the option is there to reduce repayments to the minimum for those paying higher amounts. Now we've got to wait until 6 May to change it back to our preferred amounts.
So got an email from CBA today stating they will be lowering my home loan repayments to the lowest minimum required.
There's nothing stopping you from maintaining your current (higher) repayment amount, is there?
Yeh, what's stopping me is the automatic change to the lowest amount.
The minimum amount is the "minimum". You can't pay an amount into the loan account that's above that minimum?
For example, your loan minimum repayment is $2000/month and each month, you pay in $2000 into that account.
They suddenly drop your minimum repayment to $1000/month - you telling me you can't continue to pay $2000/month? Am I missing something?
Edit: Okay I've read further below and saw the communication. They've also changed the Direct Debit amount and asking everyone to fill out a form from 6 May if they want to opt-out.
Can you not transfer additional funds into the loan account before 6 May?
The minimum repayment is the minimum amount to pay off the loan in the loan term agreed on (usually 30 years). Paying extra reduces the loan tern and interest paid.
@Danstar: Yes, I understand how the loan works. I was just wondering why it was a big deal to reduce the minimum amount payable. Most people would take a loan to the maximum allowable term that has the lowest minimum monthly payment, then they'd pay extra each month to reduce the amount of time it takes to pay off the whole loan (which also lowers the total amount of interest payable). Having the lowest minimum payment is beneficial for times like this - it provides a bit of flexibility where cashflow is a problem.
@bobbified: Yes. My OP was about it not being offered. It was being mandated without an opt in or opt out option
They suddenly drop your minimum repayment to $1000/month - you telling me you can't continue to pay $2000/month? Am I missing something?
Depends on the loan T&Cs: fixed or variable, redraws, etc.
For most people on normal variable loans, yeah, you can pay whatever you want above the minimum and reduce the balance & duration of the loan.
@abb: Yep. I have a 100% offset on my loan, and it's been "paid off" for about 6 months now. I basically just have a way to access a few hundred thousand dollars at 3% interest if I want.
Depends. If on a fixed rate loan, typically banks allow a maximum of $10k per year additional to your repayments.
Interest is calculated daily and I guarantee that every old bloke with a home loan isn't checking his email regularly enough to not get billed additional interest by this change.
I agree, there is no way that CBA doesn't profit from this. 100% a dick move
Even 1 cent they profit from a dick move like this is disgustingly unethical.
How can they do that? Is this covered in the T&Cs by the bank's ability to vary customers' repayments?
Good question
Banks seem to be doing whatever the hell they want right now.
It makes them more money and they can call it a "good faith" gesture.
It's almost like the royal banking commission we had was a complete waste of time and money.
that sucked
Banks seem to be doing whatever the hell they want
And why wouldn't they?
The Australian Government guaranteed to bail out any of the Big Four. They literally cannot go out of business while delusional morons dribble about the free market and how wonderful it is.
Understand: it doesn't matter how badly the Big Four are managed: they can never go out of business while they undertake all sorts of high risk behavior in order to return large amounts of profit.
And you pay for it if the business fails.
The Commonwealth Bank should never have been privatised. Instead, you pay for the risk of four private banks instead of one while recieving no financial benefit.
I'm not sure a guaranteed government bailout is synonymous with free market thinking. More crony capitalism.
Is this covered in the T&Cs by the bank's ability to vary customers' repayments?
Of course it is. Who do you think wrote the loan contract?
Hey, i think its good, i need my dividends to start flowing again.
Had you made extra payments in the past / saved a significant amount of interest due to offset funds? Enough to significantly reduce the estimated time required to pay back the total amount below the initial length?
Of course. Changing my repayment to minimum makes it go from 9 years paid off back up to 21 years.
The bank isn't really doing this as a favor, they'll be making a lot of interest by putting repayments to minimum for everyone
They're doing this claiming it's a 'favour'
I (nor did anyone) ask for this favour.
@Danstar: I'm sure there are some people somewhere (unprepared landlords with tenants that are refusing to pay full/any rent for example) who are happy to accept lower repayment rates.
@ssquid: Lower is the minimum required.
Someone actively paying more, as they are allowed to do under contract should not be changed without consultation.
@ssquid: They they can request it themselves. Why should I get changed to a lower repayment against my will?
Why should I get changed to a lower repayment against my will?
Come now, nobody held you at gunpoint and made you sign up to a direct debit scheme on a home loan from CBA. You could have made the repayments yourself, but you chose to let the bank manage it.
If you really don't like it, take your business elsewhere.
@abb: No, but my repayments have been the same for the last 10 years. Now all of a sudden they want to change it to the lowest possible amount to do me a favour….
And I would love to take my business elsewhere but am unable to at this point in time
@Danstar: From their email, all you gotta do is login to the web site and change the new number to the old number. Sounds like about 2 minutes effort?
Good idea to share to other customers who may have missed the email, but it's really not a huge drama for you individually.
@siresteelhell: It says you can change from the 6th, and the changes will be happening from 1st-5th (possibly in line with payment dates, possibly just random batches). I'm sure they said the 6th just to be sure all changes were in and that if yours changes earlier you'll be able to alter it back earlier.
You could check every day, or you could wait til the 6th to update, and make an extra one-off payment if any shortfall has occured… I get that it's not ideal, but come on, it's a big 4 bank, you knew they were jerks before you signed up.
Does the interest really matter if you have an offset account linked anyway? However, I do agree they should send you an email asking if you want to change it instead of doing it automatically.
Agree with this statement, doesn't OP have an offset account to dump your extra repayment?
For investment properties you don't want to pay more than the minimal because of the tax implications of a redraw.
Had the same email this morning and like most I was annoyed at not been given an option.
A simple opt in or opt out option would suffice but oh no we now have to go through a rigmarole of contacting the bank if we want them to leave it as is.
Crazy…
Link or screenshots please?
This is the body of the email
With the current uncertainty surrounding coronavirus, we're taking steps to continue providing the financial support our customers need.
This is why we're making a one-off change to your home loan direct debit repayment amount, reducing it to the current minimum required repayment. By paying the minimum, you'll have access to extra money should you need it.
What this means for you
Between 1 – 5 May 2020 we'll be automatically reducing eligible home loan direct debit repayment amounts to the current minimum. You will see this change on your normal direct debit date in May. If you're already paying the minimum, nothing will change.
You can view your current repayment details in the CommBank app or NetBank at any time.
Your options
If you're happy with this change, you don't need to do anything.
If you'd like to continue paying above your minimum repayment and pay off your loan sooner, you can do this from 6 May 2020 in the CommBank app or NetBank. You can also make additional repayments at any time.
Learn More
We're here to help
For further information on home loan support or if you are facing hardship due to impacts of the coronavirus situation, we have a range of options to help you.
Yours sincerely,
The CommBank Team
Thanks
Can't you redraw any cash that is in excess of the minimum anyway. I fail to see how consumers benefit from this.
You can redraw anytime but then your interest charged would be more. This doesn’t help anyone but the banks
@Danstar: That was my point.
Them reducing automatic payments has no tangible benefit even if you're doing it tough.
Them reducing automatic payments has no tangible benefit even if you're doing it tough.
Well no. It could potentially be a positive to the mortgagee cash flow.
But they absolutely shouldn't be doing this without at least an easy opt in for keeping current repayments.
@serpserpserp: Would it though in regards to liquidity unless we're talking immediately… I think.
Sure the money leaves your account ends up on the home loan and then you can redraw it… Usually within 24hrs? That's how it works with my bank from memory.
Would it though in regards to liquidity unless we're talking immediately
Yes immediate relief. I think that is the whole point of what the banks are trying to go here (even if misguided).
Could you just set an automatic transfer for the difference direct to the account using bsb and acc number?
Not ideal but sorts it for the meantime.
It still gives you the option to make additional payments as you would like - only change is you cannot do it by DD? It is not a super super convenient thing but not a big deal, no? Plus there are tens of thousands of people who will indeed benefit from this change for sure.
Can say the same thing but for the opposite. It will also disadvantage many who don't take notice of the change
@Danstar: I guess it is a matter as a customer you are supposed to take notice of any communications - in the end, the benefits outweigh the potential disadvantages the move brings - there are people suffering financially- this move can really help them. Banks can do better of course, i.e. asking the customers to opt in, however that will result in people missing out.
in the end, the benefits outweigh the potential disadvantages the move brings
Maybe in the very short term. But in the long term, you will be losing a lot more in interest accrued
Geez that seems pretty predatory of the bank. I would have thought after the royal commission something like that wouldn't fly. Pretty poor form on their behalf.
what diff does it make, just put as much as you can in your offset account and let them take what they deem the minimum.
is better for you to pay less as you can use that money in your offset when you want if need be.
only issue would be if its a fixed loan that allows no accelerated payments.
i've had a home loan before 100% offset, and the loan payments went from about $500 a week to $35
Fine for you and I. But for those less financially secure they will see it as "Free money" without realising they are paying more interest…
Although to be fair those people are probably already paying the bare minimum.
maybe / maybe not
i see your point but banks are a business wanting to generate money and prolong loans, and you don't need to be a financial wizard to know this
ill never pay a home off, there is no need. i act poor when i get a home loan, and then pump the offset money in the day after it settles. such shit to them
Everyone’s circumstances are different. I don’t have the option to have an offset account right now.
I think you’re missing my
Point.
The bank is doing something without asking me
If I want to do it or not.
It’s like you’re offset account. If the bank came out and said “hey, we’re gonna remove your offset account and just make you pay a little more in repayments
To cover it “
Or
Something similar
A bank can't remove an offset as it is part of the product you bought, just like i can't remove a spa from a property i sold you 5 years earlier if its part of the sale.
A bank can reduce your repayments due interest rate changes,whether it be up or down as is within the legal bounds to ensure the loans pays out over the agreed tenure, they are not stopping you paying more unless you bought and agreed to a product that prevents you.
If a person only pays the minimum whether it be a credit card or mortgage and doesn't understand the financial impact of doing so then that's their fault, not the banks. Banks make a profit off people not paying things off quick, that's their business model.
For a half intelligent person the simplest thing do is put $X into your bank offset a week that you are comfortable with and let the mortgage sweep out what it wants. Only when interest rates go up do you need to pay attention to this.
read the terms and conditions that you agreed to.
Bud. Not sure why you’d take the banks side.
My example wasn’t literal. It was the first thing I could think of.
Of course the banks want to make money. But to reduce minimum repayment without option and to say “we’re doing this to help” isn’t really in the people’s interest.
@Danstar: Because the bank hasn't done anything illegal/wrong, they are entitled to adjust your minimum payment as the mathematics sees fit. An algorithm works out your monthly payment so your loan is paid out on the 30th anniversary from when you took it out. They do this so that they make more money off you over a term you agreed to. Banks are a simple business, make money off interest.
The same reason a bank wont tell you pay off your fixed loan a month in advance as opposed to the due date.
The same reason citibank etc give you "holiday payments" on credit cards. If people don't understand the fact this isn't a holiday they need to go get financial help.
Come up with a better example.
and frankly if you dont have an offset it is because you went for the cheapest loan you could get…. which let me guess is 2-3%, really that's jack shit and the trade off you made, and i am gathering you cant overpay… this is why banks give cheap as tits rates for products with none of these features.
You cant complain that you don't have an offset, if you chose to not get one.
id be more worried about the price of your property in the next 6-12 months as that shit is gonna tank
@Donaldhump: Shouldn’t assume. I can over pay as much as I want and have no charges for paying off my loan early.
My property value is fine compared to what I paid to buy the land and build a home.
You don’t know my circumstances, so again you shouldn’t assume.
The bank can do all they want to make money. But don’t act like you’re doing people a favour by changing (in this instance) a repayment without anyone asking them to do it and literally saying if you don’t like it, call us back to go back to what you originally had.
They email me often telling me to “adjust” my payment to the minimum. But it should be my choice and it is, up until now when they’ve decided to do it for me and many others.
@Danstar: so why are you complaining if you can pay extra, why don't you just keep paying the same amount in for gods sake, whats the bloody difference, why would you even notice nor care.
man go see a lawyer and launch civil action (unsure what your compensation is because you have suffered no damages).
anyway this like talking to Donald Trump
@Donaldhump: I’m complaining that they are changing my payment to the minimum amount automatically. I don’t have a say! If I want to go back to paying extra I have to contact them.
For me it’s just an annoyance cos I keep track of my
Emails and bank accounts. But I’m sure there’ll be many others who don’t realise this and might not for years…
@Danstar: "I can over pay as much as I want and have no charges for paying off my loan early."
so just do that, surely you just pay into an account, why do you need to contact them!
@Danstar: i've voted labour my whole life, just like you said before don't make assumptions.
and if you think you have a case go see a financial lawyer, this is ****** the stupidist complaint i have header in years.
just pay extra like you said you can, why do you need to ring them, its just an account with a negative balance… where is the problem. or if it takes 30 minutes on a phone just do it
@Donaldhump: Exactly. Liberalists in the USA would be the equivalent to our Labor voters.
You brought up Trump. I assumed you would’ve understood… Guess not
@Danstar: no i brought in Trump as you two have the same level of intelligence. NONE
and hence why you didn't get the reference.
just pay extra like you said you can, why do you need to ring them, its just an account with a negative balance
Ummm I need to ring them up to tell them I want to go back to paying extra…they are putting it down to the minimum payment automatically on the 1/5….
How do you keep missing that point ?
I brought up this topic to make aware for those who maybe don’t check their home loan status often who wouldn’t want this change and may have not noticed for a long period of time
@Danstar: so your payment goes down to $100, whats stopping you paying $200 into the account. If there is an attached offset put the money in here. It makes no sense to overpay a loan, ever. I am sure you seem to know everything and know the tax disadvantages of doing so should you switch PPOR.
is there some mystical barrier I can't see.
my c/c has a minimum payment of $25 a month, but i pay it out in full. If you could explain this i may understand better, but you have spent more time whinging than the phone call would have anyway.
put i into perspective and imagine lining up for 5 hours at centerlink.
@Donaldhump: Buddy. If you read my OP subject. It says “FYI”
My post is mainly to inform others who may have missed this communication from the CBA.
It’s an annoyance for me and imo wrong for the bank to assume everyone (who they’ve targeted) wants this change.
On your theory about this post being stupid. Why even come on here ? Bargain can be found by yourself without people posting them? But we obviously come here for the convenience and to possibly find something cheap we didn’t really want but seen it in a post.
Typical left winger, everything is right in your mind no matter what.
@Danstar: The banks don't give a shit if you want the change, its in their best interest and also a legal requirement for them to adjust the minimu loan amount, not what you want but what they are obliged to do. What do you want a personal phone call?
but please explain though.
if your mortgage repayment was $500 a week, and you are paying $500 a week. If it is now $450 a week, but you are still paying $500 how does this affect you?
even better and I have asked this before but you haven't answered
if you have an offset why do you want to overpay your mortgage? Why aren't you putting the $500 a week in the offset and letting the loan account sweep out what it requires.
there is no benefit to paying out your loan ever, as long as you can put the money into an offset account, and not touch it.
if your mortgage repayment was $500 a week, and you are paying $500 a week. If it is now $450 a week, but you are still paying $500 how does this affect you?
Do you still not understand what my main point is?
It affects me if I don’t change it back. It’s getting changed without me asking for the change.
Please explain to me which part of that you don’t understand ?
@Danstar: Instead of them pulling the money from you via direct debit or however you coin the term, why don't you just push it to them as you desire. Then there is nothing to "change back"
i.e. if the min payment is 2000 a month but you want to pay 700 a week then do this. then when they adjust it lower again no action is required.
but why do you want to pay more if you have an offset account or do you not have an offset account?
@Donaldhump: I understand your point and it probably is slightly more beneficial. But with my situation, I find it easier to just have the maximum amount I can dispose of to be part of
My Regular direct debit.
@Danstar: is it not easier to push the maximum you can dispose of to them its the same thing,but then their minimum requirement does not come into play unless it goes above your amount. then there is no issue, no phone call to make ever again.
do you have an offset account? please answer this
also assuming the direct debit is monthly, you realise by paying weekly or fortnightly as soon as you get your pay cheque you will save even more interest.
but again why pay it off just have every dam cent in your offset account, and have the bank sweep what it needs.
ill be getting a home loan next 6 months, i am old and have the cash to buy a decent place, but i will act like a poor bastard at the bank, get 80% loan or whatever they lend me, next day I will offset it, and the repayments will go from $500 a week to $30 the month after, and it can sweep this out and the repayment will gradually go up but the money is in the offset forever to pay it. should i have a heart attack and need the cash or move to a new ppor i just rip the money out.
@Donaldhump: It’s not the same cos you need to remember to do it and/or not become complacent and think “oh I need few extra hundred this week I won’t pay any extra”
No I do not have an offset account as my home loan is in the name of my ex-partner who has not come to the party in signing over the title of my home. So I am stuck with the loan I am in until I can take multiple days off to go to court which I have already done numerous times in the past to get full custody of my kids.
I do pay my loan weekly. I have less than 9 years left till I’ve
Paid off my loan. I am 33 year old single parent, I have 2 kids under 12 full time and have had so for the last 7 years. So yeah, having to think to pay extra on my mortgage every week or month or what ever as I would most likely forget every now and then as I have many things on a daily basis to handle.
Anything else you would like to know? I prefer Xbox over PlayStation (mainly cos the controller), love my AFL, long walks on the beach under the moonlight and candlelit dinners. If you’re ever free to do any of the above, let me know ;) ;)
@Danstar: Why do you need to remember to do it, automate it as a scheduled payment every week to the amount you want.
And How do you pay the loan weekly if the bank does their direct debit monthly? Do you push this money or have it debited. I doubt any bank operates on weekly payment cycles,
Few holes in this story
Simple maths.
1.) get your previous monthly minimum payment prior to your complaint
2.) divide it by 4, and pay this amount every week.
3.) when minimum payment due by your bank, no payment is required as you are ahead.
More time to sort out your divorce, and. Divorce sucks but paying off the loan is not that bad given you don’t have to pay rent like ur ex prolly is.
@Donaldhump: Again with the assumptions. You like to act like you know not all.
The bank direct debits weekly. It’s a choice I’m sure many banks give you the option to do. They charge the interest monthly.
@Danstar: So why is this so hard for you to schedule your own payment weekly of an amount you desire, serious question why is that bleeding hard.
I could do it drunk with my left nut
And I made no assumption, I put the word doubt, it’s an irrelevant point. Just automate a weekly payment problem solved, please for the love of god.
@Donaldhump: I do have an automatic payment…my direct debit the bank does for the payment of my
Loan that is already established …
They did the same to me with the chattel mortgage on the car. Small business loan, $280pm only <6k owing and they assumed I wanted to completely defer payments for 6 months and rack up more interest.
They can get stuffed.
Emailed and called them to have it fixed and no written communication regarding my request being processed.
There was no way to do this online and have it reflected anywhere. With these business loans (or at least mine) there is no internet banking facility attached and I do not bank with them for anything else.