Over the last couple of weeks, I have been helping a number of clients (that use an array of different lenders) as their interest only repayment periods were approaching expiry (an interest only term is typically only used with investment loans and allows the borrower to only repay interest, not principal). Most lenders structure their 30 year loan terms between an interest only period (of between 5 and 15 years) and a principal and interest period for the remainder of the 30 year term. It’s common for investors to ‘roll over’ the interest only term so that they can essentially always repay interest only. Anyway, back to my story. When prompted to roll the repayment to a further interest only period, it can either be a simple process or a nightmare, depending on the lender.
At 11.40am yesterday I had an existing CBA customer email me to advise he wished to roll his investment loan to a further interest only period of 2 years. I replied to advise he can log into his CBA NetBank facility and process the request, and at 12.01pm I received a reply to say he contacted the CBA and its all been done – so that’s 21 minutes all up.
Now for the NAB (prepare yourself for this one)… our NAB client contacted his lender on the 30/7/2012 and, to date, the switch to interest only is still pending. So that’s 38 business days and in minutes….54,720! Not only do the NAB take exhaustive amounts of time to process such requests they also require an entirely new finance application (as if you were taking out a new loan) with all your personal details and all new supporting documents (pay slips, etc.) to be provided every single time, even though you are not changing the limits of your lending.
So the moral of the story is to consider (and get advice on) how “easy” (or difficult) it is to deal with a lender. I think this is one of the ‘value added’ things brokers provide their clients – you can learn from our experience and hopefully avoid some unexpected pain. Like everything, things change so we aren’t always successful in avoiding problems 100% of the time. But we can (and will) certainly share our experiences with you to help you make the most informed decision.
Do you have any banking horror stories (or examples of awesome services)? I would love to hear them.