Katiesmum - snap!
Katiesmum - snap!
Makes perfect sense, and yes i do have the offset account. I didn't want to use it because the funds would be there for me to get at any time. Out of sight .... out of mind, is what i wanted, but little did i know that i would end up in this situation, but i only went with the advice i was given by the bank. Even after interest comes out, i can still use that money to pay for my monthly jan repayment as i would have enough there to do so, but i just don't know what to believe anymore because the bank cannot stick to the same story.
Thank you ladies for your wonderful advice and info
Just a little update on the situation,
I have been charged interest and it's the first time that i have ever really taken notice that the interest does come out of my debit balance and not off the scheduled balance (amount owing on loan).
I always check my home loan and i have never noticed that my "ahead" balance drops once interest is charged but anyways!
So at the beginning of the month i need to make sure that my repayment of $1500 is there, then at the end of the month i need to make sure that approx $1000-$1200 is sitting in the account for interest payment AND then another repayment of $1500 needs to be in the account less than 2 weeks later for the following monthly repayment.
I'm confused, because from day one we were told that xxxx amount is our monthly repayment, and thats what we pay with a little extra on top. We have never been behind or anything by doing this, but all of a sudden we need double the amount in our account to pay for repayment and interest.
Great part is that i have my monthly repayment there to make next month, but the confusing part is that instead of making repayments of $750 a fortnight for febuary's repayment, we will need to almost double this to make sure we also have the interest payment there for when we get charged at the end of January.
Our repayments are $1500 per month. This is what we have done for 8 years, Never been behind, always in front, always paid before the actual payment date but now all of a sudden it seems like we have to make 2 lots of fortnightly repayments JUST to cover the interest each month.
Either im stupid, or just not familiar with the actual runnings of maintaining a home .....
Wouldnt the interest that was charged be for last month as they don't predict future interest. So you would need to ensure you had money for Decembers interest and then January.
When you first got your loan you effectively where a month behind (1st months interest was taken out in 2nd month, 2nd month in 3rd month etc)
Interest is charged on a daily basis, so yes you are right - interest gets charged from the last day of each month. So it starts from 1st - 30 or 31st of every month. I always assumed that interest was part of your monthly repayment and not a seperate payment. So if i pay $1500 per month towards my home loan, then thats what i expect to see my balance go down by every month but IF my $1500 repayment does include the interest, then obviously my balance only goes down by several hundred dollars, as the interest takes the rest of that repayment.
What i am being told is that i need i need to always have $1500 for the monthy repayment PLUS approx $1200 ontop to cover for the monthly interest. this is where i'm confused. However it's most likely correct but i'm having a hard time understanding it
With home loan you have a minimum monthly payment. So if this is 1500 then you have to pay that each month. If you pay 3000 one month you are still required to pay 1500 then next as this is the minimum they require. Any extra just means loan gets payed off quicker. Any extra payments go into redraw as in your case. We have always payed extra but one month ,due to me transferring money to wrong account - big stuff up on my part, I was unable to make payment. I rang bank and they were fine and said they would use redraw to cover that payment. But I had to contact them, some kind of hardship clause.
Hope that makes sense.
Regarding interest. Your loan repayments are principal ( amount you owe) and interest. Each month you pay interest and principal. Interest is a large portion on payment and a small amount of principal is paid off. So in our case in 6 years we have paid off 20k in principal and 86k interest ( ekkkk scary seeing that figure for me as I just worked it out). So in this time we have paid 106 k in payments but only reduced loan by 20 k.
i really hope that made sense in my tired state.
It all makes sense, thank you Torri.
I was being told by several people at the bank that i needed to have approx $1200 for interest to pay at the end of the month + $1500 at the beginning of the month for the actual home loan. Making this a grand total of $2700 per month.
Because i pay interest and principal i always *knew" that the interest comes out of the monthly repayment meaning that after interest i am only really paying approx $200-$300 off the principal of the loan.
I am required to pay a minium of $1500, but i always pay more .... never have i ever paid $2700 for monthly repayments - which in a round about way is what they were telling me.
It's very hard to explain it all because i get confused by what they actually mean???
If you've had the mortgage for 8 years I would seriously be talking to the bank you do your everyday banking with about what deal they can offer to take on your home loan. Many will offer discounted % rates and other perks - plus you tend to get better service if you deal with them for more than one thing and so much less hassle if you need to sort out a financial issue.
ALWAYS take down the date, time and details of the customer service officer when you make a phone call to a bank, tele co or any other organization. Get their full name and reference number - this way you have valid information if you have been misinformed, e.g. "i spoke with john smith on Monday 31st of December @ 10am and he informed me...." is taken a lot more seriously than "someone there told me....".
You are entitled to hold a company to what is said by an employee in an official capacity, i.e. when you call a customer service line. Don't be afraid to ask to speak to a supervisor if someone gives you different info than what you were told the 1st time. Even if what was initially said was incorrect, most organizations policy is to come to some agreement between what information was given to you and what is actually correct.
Remember that all these calls are recorded and staff are trained and mostly following scripting - so if one of them stuffs up, the onus is on the company to rectify it, not you. If you can tell them time, date and person involved, they can assess that particular call and provide the staff with retraining so they don't continue to provide incorrect information - this is what is meant by "your call may be used for training purposes".
Although we would have the benefit of our wages going into the offset account to reduce the monthly interest, but the amount would still most likely not match what we already pay.
Would'nt it be like going through a whole new loan again?
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