Why won’t the bank cut me some slack?
Q. I have recently tried to refinance to consolidate debt, including a student loan, and to help my children with their weddings. I have equity in a property and I also have the serviceability. The reason for being turned down was because of my recent poor history. The question I have is why the bank is so stuck on recent history when the reason I am wanting to refinance is because I have been struggling? If I could refinance it would make a huge difference to my situation. I have been told to maintain a good financial rating for three months minimum and they will look at it again. I am literally existing and there is no living going on. Do the banks have no kind of moral obligation to help people live in the best financial situation they can? I would even be happy to sign something along the lines of not applying for a credit card in the next five years or something like that.
When you apply for finance and they say it must be sent off to the finance team, is there such a thing or is it literally put through a machine that looks purely at figures? The banks are all talking about giving that personal touch but I truly believe that is false. How can they justify someone paying out excessively every week and having nothing left to enjoy instead of freeing up some income to allow them to enjoy some of their hard-earned money?
New Zealand Bankers’ Association acting chief executive Antony BuickConstable says banks will look at loan applications on a case-by-case basis.
‘‘As responsible lenders, banks will look at both your willingness and ability to repay. If you don’t have a great credit history, you can work with your bank to rebuild it. If you can show you’re willing to meet your commitments, your bank will take this into account.
‘‘If you’re having trouble meeting your loan repayments, it’s worth talking to your bank as soon as possible to see how they can help. You should ask to speak to their financial hardship team.’’
Mortgage broker John Bolton said you would need to be able to show the bank how you would be better off after refinancing. They would want to see they were not just picking up another lender’s problems by refinancing the loan, he said, and that there was no chance that you would get into the same trouble again in future.
‘‘Banks tend not to want to refinance other banks’ problems unless they see it can be solved.’’
Take care with debt consolidation. It’s easy to sign up for a lower interest rate or lower repayments without considering the overall picture of how much interest you’ll pay in total.
A higher interest rate over a shorter period of time can still mean a lower overall bill. Higher repayments might be painful now but they will leave you in a better position in the long run if they get rid of your loan faster.
Get personalised advice from a mortgage broker or budget adviser, who can help work out your options.
Do you have a finance or consumer rights question you’d like answered? Email susan.edmunds@stuff.co.nz