Investment Loan Servicing Issue

LMini eye on 01/01/2022 - 00:02
Last edited 01/01/2022 - 11:21 by 1 other user

ANZ would not service our investment loan even though they did it last year without much paperwork due to COVID. My partner had an accident and majority of his income is being compensated by the insurance company. However, the bank is only considering his part time income from his employer even though he’s getting full wages ( insurance and employer). Nothing has changed since last year and we have not failed to make repayment for this loan.

Now they have come back and advised that this loan is not serviceable? Really shocking customer service from ANZ! They just palm you off even though we’ve been with them for many years.

We haven’t tried applying with other banks. However, there’s an option to pay off this investment loan through inheritance money (currently sitting I’m retired parent’s account). Does anyone know what the implications are in terms of using inheritance cash to pay off an investment loan? The property is currently positively geared. We’re aware that once it’s paid off, then any rental income would be considered another source of income and therefore, subject to tax. We are looking to get advice from an accountant but any guidance and input is greatly appreciated!

Are there any other options with banks if we don’t use the inheritance cash?

Thanks heaps!

Financial ANZ

Comments

  • CrowReally on 01/01/2022 - 00:22

    Happy New Year!!

    • Mini eye on 01/01/2022 - 05:31

      Happy new year to you too!

  • Poppin on 01/01/2022 - 00:43
    +2

    Are you refinancing? What’s the terms of the insurance? Will they pay out indefinitely? If there are time or payment caps, then that’s why it may not be considered in serviceability calcs.

    I don’t get why you have to pay it off though, is the bank calling in the loan early? Doesn’t make sense they would do that if no payments have been missed.

    • Mini eye on 01/01/2022 - 05:20

      Yes the loan was fixed was 1 year and it’s expiring on the 10 January. We tried to enquire/ lodge in November but they just said to re apply closer to expiry. And now they’ve just said not serviceable without much explanation. They tried to put us through to the financial hardship team but we’re not and have been paying the loan consistently every month? None of them knew what to do over the phone and there was no notes on our record to say what was done last year in tens of the loan being approved. So they advised us to re lodge with the same branch and it was rejected with the term not serviceable.

      The determination with insurance will be finalised around May/ June re payout. But in the meantime, they continue to cover some of the payments.

      The bank was saying that the interest only loan will revert to principal and interest after the 1 year has lapsed. And that would cost us more in terms of repayments which we don’t want to do and hence thinking of paying off the loan so we don’t have to shop around for a bank that would give us a loan for this investment property based on our situation. It’s such a hassle to go through an application.

      You’re right, we couldn’t understand why they would do that as well since we haven’t missed any payments!

      • Poppin on 01/01/2022 - 08:36
        +2

        It’s because you’re refinancing, which is effectively taking out a new loan with all of the same assessments required. Your financial position has materially changed because the source of income matters, not only the amount.

        Sounds like you’re currently paying interest only. It also sounds like the bank cannot take the insurance payments into account because of the uncertainty. Can you afford the new payment amount when the loan switches to P&I? If so, you don’t need to pay off the loan in full or refinance. I suspect you would have similar issues going to another lender as they are unlikely to include the insurance partners either. Probably just stick with it until the insurance is finalised.

  • SmiTTy on 01/01/2022 - 02:27

    Is your partner likely to return back to work? I understand there are some lenders who will consider insurance payments if you can provide justification that you will be returning back to work. But best speak to a mortgage broker about your situation

    (though i do agree with you… That is very poor form of anz). How did they find out in the change of income?

  • Mini eye on 01/01/2022 - 05:31

    We have contacted a broker, however, they don’t return to work until the 10 January due to the holiday period which is when the loan expires .

    He has returned to work but on a part time capacity

    I am appalled by ANZs level of customer service. It’s like they don’t want to deal with you as soon as something is not serviceable. No genuine care about assisting clients and providing other avenues or options for the best outcome. We went through complaints and yet no resolution. I will definitely spread the word on how bad they are. if someone was just putting in numbers with a calculator etc, at least explain why it wasn’t serviceable.

    When you put in an application( which we needed to do as our expiry was nearing the end of the 1 year term), they require current payslips and we don’t dodge anything.we were upfront and honest.

    • SmiTTy on 01/01/2022 - 09:07
      +4

      If its an expiring fix loan, usually (as far as im aware) it just reverts automatically to a variable loan. That's the "do nothing" option. See if that is an option for u rather than having to actually apply for something.

    • johndowy on 01/01/2022 - 11:10
      +3

      You need to see a broker as there are a number of things you do not understand.

      When you interest only period ends on January 10, your loan will just revert to principal and interest payments. Usually it would end up close to double the monthly repayments. The bank is not forcing you to repay back the loan but as others have said, you are trying to refinance the loan and basically being rejected as your situation HAS changed.

      You don't have to do anything before January 10 and nothing will really happen. Just an increased monthly payment.

      If your property really is positively geared, then you are already paying tax on any rental income.

    • Baysew on 01/01/2022 - 11:26
      +2

      I am appalled by ANZs level of customer service. It’s like they don’t want to deal with you as soon as something is not serviceable.

      That has nothing to do with customer service. Seems like they are making a prudent commercial decision based on your current financial position.

      We haven’t tried applying with other banks

      You might find the same response or another bank with a different appetite for risk may lend to you.

      • Mini eye on 01/01/2022 - 20:28

        I understand a business decision but as a long term client, from a customer service perspective you’d at least think there’d be a discussion if there’s been any changes to circumstances that may assist the client with the specifics of the application. Even if it is just asking you to go through your statement of position to see if there is anything in your budget you may have overlooked and may increase your financial position towards a favourable outcome. Scenario - you go to the Bank, you have to queue for 20 minutes, they rush you in and send you away with forms to complete. You return them completed with an email of 30 plus documents- young Bank guy takes forms and then calls you later to ask one question, calls you back 15mins later to say sorry you are not able to service this loan.

        I do appreciate your glimmer of hope with other banks possibly servicing our loan!

  • kunimitsu on 01/01/2022 - 08:33

    I don't think ANZ is forcing you to payoff your loan unless there is other story behind it eg. miss payment or fraud. Your serviceability of your existing loan is determined as per application at that time.
    Are you looking to extend your interest only period? if yes than full income verification is required.

    As stated above if you are looking to refinance then speak with your broker, if any lender accepts insurance payments as part of the source of income.

    or stay with ANZ and reconsider extending interest only when your partner returns to full income. P&I vs IO won't be a huge difference in repayment esp you got funds to cover repayment but can't advise on the taxation part.

    • Mini eye on 01/01/2022 - 09:03
      -2

      They’re not forcing us to pay it off, they’re just not extending the .io loan. There’s been no missed payments or fraud involved. I’m not keen to stay with ANZ anymore and will be looking at other lenders.

      Thanks for the advise re p&i and .io repayments. Thought there would be a huge difference.

      Will get advise from broker

      • SmiTTy on 01/01/2022 - 09:08
        +2

        Just stick to he variable then. It's not that bad.

      • Seraphin7 on 01/01/2022 - 11:37

        they’re just not extending the .io loan

        So here's the rub.

        As others have mentioned, the "do nothing" option keeps the loan in place, but moves you over to standard P&I terms.

        The loan itself is not expiring, just the interest only terms.

        My humble suggestion here is "panic slowly" … the loan will remain on foot after the expiry of the interest only period and will revert to P&I. This will obviously cause the repayments to increase, but from what you have said this is not a problem for you, at least for a couple of months. In those couple of months you can liaise with brokers/other banks/ANZ in an attempt to get what you want.

        Sounds like worst case scenario is you pay off a couple of months of principal while you get it sorted out.

        • Mini eye on 01/01/2022 - 20:29

          I think we’re may just do that! Thank you

      • Muzeeb on 01/01/2022 - 12:33
        +1

        Will get advise from broker

        I think I've discovered the problem here

  • kyle on 01/01/2022 - 08:38
    +3

    If it's 1 year fixed, then it'll switch to variable automatically? How did the bank find out about the change in circumstances if repayments have been on time? If the property is positively geared, the rent is already assessable income. If the loan is paid off, that just means you're not getting any more interest deductions.

    • Mini eye on 01/01/2022 - 09:04

      We had to lodge a new application as the loan was expiring on the 10/1. Therefore be docs needed to support application. That’s how they knew change in circumstances.

      • Seraphin7 on 01/01/2022 - 11:38
        +2

        You only need to lodge a new application to retain the IO status. Do nothing and revert to P&I, at least while you sort out the whole situation over the next couple of months.

        • Mini eye on 01/01/2022 - 20:30

          Not a bad suggestion but the repayments end up being about double the amount and that’s the issue

          • Quantumcat on 03/01/2022 - 00:51
            +1

            @Mini eye: If you have the money to pay it off then what's the issue just paying P&I while you sort it out?

            It is a bit like if you're having a dispute with your insurance company over damage to your car, and rather than just take the bus for a bit while it gets sorted out you're so annoyed you're going to sell your car for scrap metal.

            • Mini eye on 05/01/2022 - 14:40

              @Quantumcat: We are trying not to ask parents for the inheritance money if we can avoid it.

              • Quantumcat on 05/01/2022 - 16:31

                @Mini eye: If you can't afford P&I payments then maybe the bank is right not to refinance you?

          • Hearthstone on 05/01/2022 - 15:15
            +1

            @Mini eye: I thought money and repayment isn't the issue? if it is an issue then it required a new contract/refinancing as the original deal was 1 year IO then I+P
            if you want to keep paying IO then it a new term and new contract/refinancing and when that happen it trigger new assessment and you go through the hoop again, bank standard process, you cant get around this especially now after the RC, they are strick with their process and assessment

  • payless69 on 01/01/2022 - 10:41
    +1

    Interest rates are on the way up.
    AMP already throwing 1.35% lollies towards strangers!

    • Mini eye on 06/01/2022 - 14:19

      Thank you!

  • brendanm on 01/01/2022 - 15:49
    +3

    Just let it go to P+I, you have cash by the sound of it. No one will refinance you if you can't service the loan (husband isn't working), nothing to do with ANZ specifically. It's like you asking why they don't give million dollar mortgages to people on Centrelink.

  • thirtysixd on 08/01/2022 - 19:20

    if you cant afford p+i you probably shouldnt have an investment property tbh

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