The fee will be 0.12 percent of the Basic Loan Amount (excluding funded application fee and LMI premium) and is payable up-front prior to loan being approved. Please refer to the Rate Guarantee Acknowledgement Form, which outlines how this fee is to be paid.
Opting to take the Rate Guarantee will mean that the interest rate at acceptance of the application (and signing of the Rate Guarantee Acknowledgement Form) will guarantee that the interest rate will not be higher than that rate, but if the rates decrease prior to settlement the lower rate at settlement/funding will be applied if the loan settles within the rate guarantee period.
The rate will be guaranteed at the time of application for 90 days, the Rate Guarantee period. The 90 days starts from the date the Rate Guarantee Acknowledgement Form is signed. The form needs to be fully completed, signed by all applicants to the loan and forwarded with all supporting documentation to the Society’s Intermediaries Unit. To obtain the indicated fixed rate on the RG form all documentation must be held by the Society by the COB of any new Fixed Rate change date.
The fee is non-refundable even if rates do not change or decrease.
If the loan does not settle within the rate guarantee period the applicants will have the ability to re-new the rate guarantee for a further 90 day period for an additional fee and subject to the interest rates at that time, not the previous rate at initial acceptance stage.
Applicants who do not take up the rate guarantee will have the higher rate at the time of acceptance or at settlement applied to their loan. If rates increase they will receive the higher rate and if rates decrease they will receive the rate at the time of acceptance.
How do you renew a Rate Guarantee?
If the Rate Guarantee was taken out and loan approved where the Rate Guarantee period has expired, the applicant/s will have the option to select a further Rate Guarantee period of another 90 days.
14 Days prior to the expiry of the Rate Guarantee period (90 days), a letter including a new RGA form will be forwarded to applicant/s advising that the existing period is about to expire. They will have the option to renew for a further Rate Guarantee period. The applicant/s will need to complete, sign and return the RGA form using the current fixed interest rate, which is on offer that day. The applicants will be required to pay an additional fee of 0.12 percent.
(The applicant can only accept the Rate Guarantee option, as there's no need to sign a form to indicate they don't want to renew the option.)
What happens when a Rate Guarantee period expires?
Once the RG period has expired, the loan will revert back to as if no RG acceptance has been processed. The interest rate will remain at what it was when the form was processed but will be subject to increases up to the time of funding.
Cutover Period for loans in the pipeline:
Loans in the system will benefit from the Rate Guarantee option without paying the fee.
Loans that are offered but not yet accepted, or accepted, will benefit from the Rate Guarantee without paying the RG fee.
Loans that are presently being processed will need the Rate Guarantee Form to be completed, signed and forwarded to the Society immediately for processing, although applicant/s who received “Unconditional Approval” by implementation date (8th May 2008) will not be charged the RG fee.
Loans that have been processed but are unlikely to receive “Unconditional Approval” by implementation date (8th May 2008) will be treated the same as a new application and will require the RGA form to be completed and forwarded to the Society immediately for processing.