If you’ve taken out a loan that you’re having trouble repaying or have defaulted on, you may be able to sue the lender for compensation if the lender did not succeed to see that the loan was improper for you at the time it was taken out.

After the Global Financial Crisis in July 2010, the National Consumer Credit Protection Act 2009 (National Credit Act) established accountable lending standards on lenders, that makes it a compulsion for them to determine whether a loan is not suited in light of the consumer’s needs, goals, and financial status. That implies, consumers should only be offered credit if it is appropriate for them. This entails making certain that:

  1. the loan satisfies the customer’s needs and goals
  2. the customer is able to repay the loan without significant difficulty.

If a consumer can only meet his or her financial commitments under a loan contract by selling their primary house, the loan will plausibly be judged unsuitable.

If a consumer suffers a loss as a result of an improper loan, the lender may be forced to pay them.Lenders don’t always understand this, and the results may be disastrous for borrowers, who risk losing their homes and encountering bankruptcy.

Before selling your house or an investment property, or declaring bankruptcy, it is critical to seek assistance.

Interest only home loans

Banks and mortgage brokers have recently been chastised for issuing interest-only mortgages. These are loans with a fixed repayment period, usually 5 years, during which only the interest is due. However, once the interest-only period ends, the loan repayments might climb by 30% to 60%, potentially putting the borrower in financial distress.

According to research, up to one-third of borrowers may be unaware that they have an interest-only house loan or that their obligations will significantly grow after the first interest-only time.

Rights as a borrower

The National Credit Act requires lenders and brokers to provide credit only if the consumer can make the payments without experiencing significant hardship or having to sell their house and the suggested loan fits their needs and goals.

Asper the National Credit Act, a lender needs to:

  • Inquire about a customer’s needs and goals in a sensible manner
  • Inquire about a customer’s financial condition in a sensible manner
  • Verify the customer’s financial status in a reasonable manner

Many lenders have not succeeded in creating precise protocols for knowing a loan’s eligibility.

  • the lender failed to make enquiries to ensure that your loan was suitable for your requirements or objectives
  • the lender failed to verify your reliable income in your loan application, e.g. it included bonuses or overtime, or it failed to obtain PAYG records
  • the lender did not ask you about your actual living expenses or obtain statements but instead determined your monthly expenses based on a benchmark tool like the Household Expenditure Measure
  • you were suffering from illness, were elderly, or did not understand English when you applied for the loan
  • you were given an interest only loan that you are struggling to repay since the interest only period ended or you will struggle to pay at that time
  • your interest only loan had an interest only period of greater than 5 years
  • your home was used as security for a loan used to buy an investment property
  • the loan was for more than the value of the investment property
  • the lender did not ensure that you could still repay the loan if your interest rate increased
  • the lender failed to properly consider your existing debts
  • the lender over-estimated the rental income returns from an investment property that you were planning to buy with the loan
  • your ability to repay the loan was reliant on rising house prices.

Why Taxcellent Consulting Services?

Taxcellent Consulting Services financial advice disputes lawyers are experts in the field. We fight for fair, and we can help you to get the settlement you deserve.

We offer ‘no win, no fee’* arrangements for these types of cases, which means that you don’t have to pay for our legal services if we don’t win.

We have offices in Melbourne, Sydney, Brisbane, Perth, Adelaide, Darwin and throughout Australia. Contact us today to find out how we can help.

Financial services dispute cases

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  • Commonwealth Bank Open Advice Review program
  • Macquarie private wealth
  • NAB financial advice
  • Big Banks pushing in-house products
  • Financial Circle Pty Ltd
  • Combined Insurance sickness and accident policies
  • Irresponsible lending disputes
  • NAB lending misconduct
  • Future of financial advice reforms

No win, no fee*

Our financial services disputes lawyers are experienced in winning fair compensation for our clients on a no win, no fee basis.

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