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  1. #1
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    Default Home loan payments - sorry, but do you think this is right??

    Hi guys,

    To make a long story short, i'm currently on maternity leave , we have been in the home loan for 8 years with the same bank, always made our monthly payments with only a little extra on top, i don't know alot about home loans, but i do know a little . I was unable to claim for ML payment, so instead i had to claim for the BB. BB ran out end of Nov 2012. Dec monthly payment was made, and we were still ahead by 1 month payment (this being jan 2013 monthly payment).
    Reason for us being 1 month ahead was because DF and i was making little extra payments towards the home loan so that when my BB money ran out, we had enough in our redraw/homeloan to use as our jan monthly payment (as i return back to work in jan).

    However, when i called the bank earlier this week to double check that it was still ok (even though i called them earlier in the year to inform them why i was making additional payments hoping that it will be used as a payment later in the year), i was told that while i'm ahead on my home loan (home loan payments are $1500 per month, and i currently have $1550 sitting in the home loan) - however i've been told by the bank that once i get hit with interest of approx $1200 on 31st dec, i will only have approx $300 available for my jan repayment - there for on the 7th jan when my monthly payment is due i will be arrears by $1200.

    I honestly thought by making addtional payments to cover the cost of jan mortgage repayment would be in like a redraw (technically skip a payment, and use what i have in the redraw to cover a payment) well atleast this is what i was told by the bank providing i had enough funds in there (which i do)

    I have spoken to a total of 8 different people in the bank who all say the same thing EXCEPT for 2, who say that the money i'm ahead by wont be affected when interest gets added to the loan ,and that the $1550 will still be there AVAILABLE to use as my jan repayment (as orginally planned). However after so many of them all agreeing that once interest is added, i won't be ahead by what i'm CURRENTLY ahead by, i don't see how the other 2 can be right (think the same as me in other words).

    I cannot belive that after paying extra to our home loan and thinking i was keeping us covered, is NOT.
    I feel like all the extra money i paid is paying nothing. I've been crying over this so much and all the people i spoke to at the bank were so heartless..

    Could someone please tell me if this is correct?

  2. #2
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    Default Home loan payments - sorry, but do you think this is right??

    We pay extra into our mortgage every month and can't use it towards regular payments. It's quite complex but that is definitely true for us.

    Sorry

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    Default Home loan payments - sorry, but do you think this is right??

    Ummmm.

    I'm trying to think how our loans work. I initially thought the majority of bank people had it right, but now that I think about it, I think when the 'interest' is accounted for in the account it just raises the amount outstanding on the loan balance and the amount available for redraw isn't affected until the date the repayment is due.

    So when I look at Internet banking the negative amount (loan balance) increases by the amount of the interest charge but the positive balance in the account remains the same. Then when the repayment is debited it decreases the amount owning by the difference between the repayment and the interest previously accounted for and decreases the amount available for redraw in the account.

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    Default Home loan payments - sorry, but do you think this is right??

    Quote Originally Posted by kw123 View Post
    We pay extra into our mortgage every month and can't use it towards regular payments. It's quite complex but that is definitely true for us.

    Sorry
    I assume ours is the same. I'm not 100% sure though. We pay extra just to pay it off a tiny bit quicker not for any other purpose.

  5. #5
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    Nancy - I think mine does the same, as i have gone over & over & over on my internet banking to try to figure this out. My positive balance only gets decreased once the monthly payment is made to the scheduled loan amount and the remaing of what we are ahead by stays the same until we add another payment and then it decreases when next month payment comes out and so on. At the end of the month when interest is charged, it gets charged to the scheduled amount and not the positive amount IYKWIM???

    We should be allowed to make extra payments into our home loan account and use any outstanding amount we are ahead by for the purpose of making a mortgage repayment, as this is what i was informed to do when i called earlier in the year. Otherwise i would have just walked into the bank on the 7th and just depoisted the money into the home loan.

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    Default Home loan payments - sorry, but do you think this is right??

    Having thought more about it our home loan account with redraw definitely works differently to our line of credit account which debits the interest charge from the positive balance PLUS requires a repayment even if the positive balance is far greater than the amount of the repayment due.

    Whereas our home loan interest just effects the bottom line, not the amount available for redraw. And provided the amount available in the account is greater than the repayment we don't actually have to make the payment. It just reduces the amount in the redraw facility.

    So if that is the way your account has worked in the past then I think having more than the monthly scheduled repayment in the account should mean you are covered as planned.

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    Hmmm, now i'm confused. Nothing has been said in regards to having to make a repayment regardless even if there is more than enough to make the repayment out of the redraw, so my guess is that *maybe* this is not the case for my particular home loan,( or maybe they have failed to tell me this and they just ASSUME i know???)

    I was simply told that aslong as i had $1500 sitting in the home loan account, i would be covered for jan repayment.
    2 bankers have told me that out of the $1550 i have extra in the home loan, $1500 will be taken for the jan repayment and that i'm covered, where as all the others have said NO, it will pay your interest...

    So i guess until interest gets charged, i just won't know if it's all ok or not. Now everything i have in savings has to sit and wait until after the 31st because i will have to use every penny i have to make ANOTHER JANUARY REPAYMENT (if what i'm told by the other bankers are true).

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    Default Home loan payments - sorry, but do you think this is right??

    The repayment gets deducted from our account regardless - so the $1500 repayment would get taken from whatever the positive balance in there was. Provided that amount is in there you shouldn't have to add anything. You know, provided we are 'ahead' we don't necessarily have to top up each month.

    But other loan products we have work differently. We have to actually add a set amount to the loan each month irrespective of whether we already the required amount in the account.

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    Default Home loan payments - sorry, but do you think this is right??

    If your loan has a redraw facility and you've definitely paid $1550 extra - why not just redraw $1500 and then leave it in your bank account for your normal Jan date deduction??

    If they are going to be a pain about using the extra funds for a repayment, just do it the old fashioned way! My bank does this too, even if I'm ahead they won't automatically use that for my 'normal' deductions.

  10. #10
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    Quote Originally Posted by NancyBlackett View Post
    But other loan products we have work differently. We have to actually add a set amount to the loan each month irrespective of whether we already the required amount in the account.
    Now something about this got me thinking and i do remember atleast two people (out of the 8 or so i have spoke to) tell me that i am contracted to pay $1500 a month, however it does not make sense as to why the extra payment i made to the loan will be used up in the interest i am charged for december though, and this is what it's all about, and besides, i have been told i can use my re-draw to make regular payments if i have enough to do so.

    I just don't know what to believe, but i know that next time i won't be making another extra payment like this to cover me for anytime in the future. I'll keep adding that little extra to get it paid off faster, but wont be doing this all over again.


 

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