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Credit Union Australia (CUA) / Heavy penalty for breaking out of fixed loan

1 Brisbane Metro Area, Queensland, Australia Review updated:

Last year I spoke to my Credit Union Australia (CUA) Branch Manager about changing my Variable Rate Mortgage to a Fixed Rate. I was told at the time that if I were to switch back to the Variable rate I would incur a very hefty "break out" fee of around $25, 000. I was also told that if I were to sell my townhouse the "break out" fee could be significantly reduced or even waived.

Some months later I decided to sell my townhouse, keeping in mind that to sell the house would not incur the huge break out fee. I eventually found a buyer and a "Contract for Sale" of the property was entered into. I was told the following day that I would be liable for the break out fee, to which I informed him that I was told the break out fee did not apply when selling the house. I was told, and subsequently, checked this with the Branch Manager who said that I would incur a break out fee of over $30, 000 because I was selling the house and not intending to replace the existing mortgage with another one. I indicated that I was not advised of this fact during our previous conversation however the Manager just said that it had been the decision of "CUA Head Office" in Brisbane.

Due to the imposition of this horrendous penalty, to which I attribute a significant portion of blame on CUA, I now will have insufficient funds to pay a Bond along with the required 2 weeks rent in advance on a rental property. My family and I are now faced with having to sell our house (or we will be sued for breach of contract by the buyer if we pull out) and have nowhere to live, except for our large passenger van. All pleas to show reasonableness and compassion have fallen on deaf ears and I have to pay the balance of the mortgage PLUS the $30, 000 plus penalty on top.

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Comments

  • Ly
      19th of Jul, 2010
    0 Votes

    MMMM. sounds similar to my situation expect mine is as a result of a separation, so too be a divorce. As my ex wife is on the mortgage, in order to get her removed from the mortgage documents, Credit Union of Australia (CUA) say I have to reapply for the same loan again.

    But now, I need to borrow extra in order to settle a property settlement with my Ex wife and pay out our other joint debts. If the property settlement wasn’t hard enough, now I am banging heads with CUA.

    I have a provision where I can make a bulk repayment under the fixed load, wait for it to clear and then pay the last $ 50o and CUA say this will not incur any early repayment fee. However, in order to get more finance the new lender wants a clear title which I can't provide.

    I have considered getting the extra money from CUA, however their terms aren't suitable as given the amount I need, and I need a longer term than their 30 years. Sounds silly I know, however I need to get a 35 year term loan so I can afford to keep the house, otherwise I will have to sell.

    As for the extra finance, CUA say no, but another lender, actually two others (in fairness as I am naming CUA for bad, good should be acknowledged they are ANZ and Police and Nurses credit Union said they will lend the money even as a second mortgage, however there is an incredible amount of paperwork and fee's involved.

    So to settle with my ex with me keeping the house which is part of the settlement, staying with CUA means I have to sell the house as they won't lend me the money I need. Also, I have asked as there is a means to payout their loan, if I make a bulk repayment, then the remaining balance, however to allow me to pay it straight out which allows the new lender to get a clear title, they will not reduce the early repayment fee.

    As for the title, I should also mention that CUA lost the title over 2 years ago during the settlement of (at the time) our house. (In fact they lost everything - title, discharge, mortgage documents)They sent documents out to get a new title and tried amending some of the terms of the loan, to which I said no, as I had a copy of the original terms. Anyhow, it has taken nearly 2 years to get CUA to acknowledge my terms of the mortgage, but they still are happy to sit back and see huge break fee's as I need to re-finance elsewhere as they won't, or keep the loan with then and sell the house...MMMMM ... CUA, not that customer friendly if you ask me.

  • Kh
      10th of May, 2012
    0 Votes

    Why have CIA not passed on the full .05 rate cut

  • Fa
      1st of Dec, 2013
    0 Votes

    Hi guys,
    I have jouned CUA since April 2013. I was happy customer and I just lived it, everything was good till they launched new website, then my bad experience started.
    1) Im not able to see online how much my offset account save me interest. I have to check it on montly statement ..., anyway I cant check it daily and easily as its used to be before.Why u needed to make urs harder while others make it easier?
    2 ) I got my second loan through CUA.Mmmmm was it good Idea?
    If you have breaker pakage u are eligible to get five loans for NO VALUATION FEES, NO PAKAGE FEE.It means you save me $200 + $350 = $550.So u guess what!!!
    3) Now, I have another problem.
    This is auto chase.
    What is that mean?
    For example;
    My montly loan payment is $2000
    It means my yearly payment is $24000.
    if you pay every fortnight your payment should be $24000÷26= $923.
    Now auto chase comes and credits your home loan account for $152 every fortnight, because new CUA system doesn't understand every year is 26 fortnight s not 28!!!.
    So this is my new challenge to explain them.
    3) I was behind the line for long time no one could answer or not qualified enough to advise me.
    I have to go to bank to see someone.

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