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Ask Deborah Awyzio Your Own Question
Deborah Awyzio
Deborah Awyzio, Solicitor
Category: Australia Law
Satisfied Customers: 863
Experience:  Bachelor of Laws (QUT), BIT (QUT), Family Law Accredited Specialist, over 12 years experience
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I bought an investment property a few years ago and I used

Customer Question

I bought an investment property a few years ago and I used the equity in the house that we were living in to get the deposit. Then once the property was built and it came time to pay for investment we got the investment loan. This was all fine. Just before Christmas we bought a new house and sold the old house. When we were going through the financing process it came up that the loan for the old house and the loan for the investment were cross tied. This came up very early in the process. I spoke to the bank and asked them to verify this for me and they did. At this point I was told that the bank will do a valuation of investment property to see if there was enough equity in it to be able to stand alone. If not I would have to pay down the loan or pay some mortgage insurance if the loan refinance amount was more than 80%. This was about 2 months before settlement. Anyway time went by and life went on organising real estate agents and doing open houses. Getting all the finance approved and so on. And everything was fine. As far as we new the investment was going to stand alone. There was going to be about $30000 surplus on new loan and we had still saved about $20000 to get through the first month ( I am self employed by the way ). Settlement date was the December 5th. On December 2nd I get a phone call from my conveyancer saying that there is an $18000 shortfall on the loan. I tell her that this is not possible as there should be a $30000 surplus according to the calculations of both myself and my mortgage broker. Was told that if I don't come up with cheque by 10am on 5th then deal could fall through. Got cheque made from all of my savings. And gave to the conveyancer so as not to loose the $117000 deposit that I had paid on the new house. Got this all sorted and moved in. Had to borrow another $10000 from a relative to get through first month. I have since spoken to the bank about this and while they haven't said it was their mistake they have said( and I quote this) "we realise that we have stuffed you around". After this the bank had a look to see if they they could refinance the loan as they were supposed to in the first place. They said that this will not work as this would be irresponsible lending on their behalf. I have also asked the bank 3 questions more than once that have still not been answered.
1. When did the bank know that I would have to pay the loan down?
2. When did they pass on this information?
3. Who did they pass this on to?
As far as I know this was released to my conveyancer on the 2nd December.Now for the actual question that I want to ask you.Based on the information above.
Should the bank in question pay me any sort of compensation due to the financial strain that they have caused?
Can they be held liable if I can't make payments as there was a total of $48500 extra that I had to pay? This is equal about almost 1 year of payments.
Due to the surplus that was taken I now am paying more interest on my loan. Can they be held responsible for this also?
At this point I am just looking for advise and also understand that that is all this will be.
Thanks.
Submitted: 1 month ago.
Category: Australia Law
Expert:  Leon replied 1 month ago.

My name is ***** ***** I am a NSW Solicitor. I will do my best to assist you with your question.

Expert:  Leon replied 1 month ago.

Good Evening.

The banks do not work out the payout figures until a few days before settlement.

They then notify the conveyancer/solicitor acting on the sale.

Was it the bank that you sent the discharge to or the broker?

Customer: replied 1 month ago.
Everything was done through mortgage broker. I understand that final figures are done right at the end just before settlement. But as the bank was asked for this information about the cross tied loan shouldn't they have let me know in a reasonable time rather than day before settlement. especially for such a large amount of money. Even if it was just an educated guess.
Expert:  Leon replied 1 month ago.

Good Evening.

The broker that was organising this should have been able to tell you what was going on.

For the fact that there was not enough money says to me the loan for the new house was not what you expected and therefore there was a shortfall.

You have to look at all of the process and the broker has to break it down for you.

The loan were set up this way by the broker and you should have been advised at the beginning.

Have you spoken to the broker about this?