2015 - 2016

Lending

Property lending

Ms K asked the bank for a home loan to complete the purchase of a leasehold property.  She provided the bank with relevant documents, including a copy of the lease, deed of transfer of leasehold interest, and a registered property valuation. The bank emailed her solicitor to confirm finance was approved, and he then advised the vendors that the agreement to purchase was now unconditional, and asked the bank if it would be sending any security documents.  

Nine days before settlement, the bank forwarded mortgage documents to Ms K’s solicitor with instructions to register a mortgage against the title.  The solicitor explained to the bank that this was a leasehold interest where there was no certificate of title, and so the lease had not been registered.  He suggested that they endorse the lease with the mortgage and that the bank hold a copy of the lease. The bank declined.  Two days before settlement the bank’s offer of home finance was withdrawn.  Ms K accepted the bank’s offer of a personal loan, at higher interest rates than the home loan would have been.

Ms K wanted the bank to lend her money at home loan interest rates.  A bank’s decision about lending is a matter of commercial judgement that we cannot interfere with, but we recognised that Ms K had been placed in a difficult position so close to settlement date, and that she should be compensated.  We recommended that the bank pay her $4,000 in recognition of this, which she accepted.