My personal experience with refinancing a couple of investment loans has given me a clearer understanding of why borrowers often put this in the ‘too hard’ basket.
BY EYNAS BRODIE
There’s been a lot of talk recently about borrowers fleeing the ‘big four’ banks to chase a better deal elsewhere, especially after all four jacked up interest rates by more than the Reserve Bank of Australia in November.
With each of them reporting billion-dollar profits this year, it’s little wonder consumers saw red.
Of course the media had a field day with it, running story after story about how borrowers had had enough and were likely to punish the banks by taking their business elsewhere.
While both sides of government and consumers were busy bank bashing, smaller lenders (i.e. building societies, credit unions and mutuals) capitalised on the publicity, using the opportunity to reinforce their message that customer service remained their number one focus.
Even though costly exit fees prevented many borrowers from refinancing (an issue that has since been addressed by the Federal Government for loans taken from July 1, 2011), there was definitely a public perception that hundreds, if not thousands, of consumers were dumping their bank for a better rate elsewhere. But I have to wonder how many actually did.
You see, I was one of those fired up consumers who decided to vote with my feet, hold my bank to account, put my money where my mouth is – all those empowering things. But I have to tell you, several months later, the transition from one bank to another still hasn’t been completed.
Let me back up a bit… our first step at the start of this process was to challenge our lender to match a competitor’s rate. This has always worked in the past, but not this time – even after 20-plus years of loyalty to this particular lender. So the paperwork began to release two of our investment loans from this lender for refinancing elsewhere.
Let me tell you, if the exit fees aren’t what stops you, the paperwork may well be! We’d forgotten how many forms had to be completed for a new loan, let alone two, and the amount of detail and historical information that was required! For a busy working couple it was a hassle, and the thought of finding a good mortgage broker seemed equally as time consuming. But, after several meetings, phone calls and emails, we got there, finally.
Then we waited. And waited. And waited. Eventually we received the next batch of forms to be signed. Following the bank’s instructions, we took them, with relevant identification, to a Justice of the Peace (JP) to be witnessed. (Finding a JP at a time that suited both of us was a mission in itself.) What the bank had failed to tell us – and perhaps we should have realised – was that the JP would need proof of ownership with a title reference number for each property attached to each loan. (Deep breath)
We made a quick dash to the nearest internet café (the JP was only available for another 40 minutes) to conduct a title search on the properties online. And what do you know? The bank had attached the wrong lot number (the one belonging to our home!) to one of the loans.
So we’re back to waiting for the correct paperwork to be issued before we can schedule another visit to the JP.
And that, dear readers, is why it doesn’t surprise me to hear mortgage holders so often say “I know I should switch banks, but it’s too hard”.
It would be great if the government could do something about that!
Eynas Brodie is the editor of Australian Property Investor magazine,