Mortgage finance

Complainant had a top-up loan facility granted by the bank. He was allowed to draw on the facility, awaiting the registration of a bond on the amount sanctioned. The customer was allowed to draw on the funds and in the process an overdraft facility was created and condoned by the bank for several months.

Unfortunately, the decision to grant the customer a top-up facility was never made in writing to the customer and therefore never formalized. Following the registration of the bond, and when the contract was being formalized, it was realized that the customer in fact did not qualify for the top up in terms of the banks assessment procedures, that is, income to repayment ratio.

It was found that the error squarely lied with the bank and therefore it was recommended that the customer’s overdraft and home loan be amalgamated and repayments scheduled. Furthermore, the bank had to ensure that this does not place financial hardships on the customer.