BobRoss
2022-03-08 15:08:53
- #1
Hello,
today the day has come when I urgently need your collective wisdom:
On February 6th, I submitted a loan application at a large nationwide bank (a mix of a follow-up loan for several construction loans with fixed interest expiring in March & capital procurement for free use) with the following conditions:
Loan amount = 1.8 million EUR
Term = 10 years
Interest rate = 0.8%
The application was made through an independent loan broker. All documents requested by the bank during the application process were submitted on time. At all times since the application was submitted, the broker assured me that I could expect loan approval based on the submitted application documents. The traffic light was green.
Additional info: one of the loans to be repaid has a term until 2025. I want to repay this loan early – I have a corresponding confirmation from the currently financing bank, and this confirmation was also forwarded to the new bank. The wording in this confirmation is:
"We confirm that approval for early repayment of your loan xxx as of 03/20/2022, taking into account a prepayment penalty, is granted.
On March 7, 2022, I was informed by the broker that the loan application was rejected by the bank because the bank cannot refinance contracts with prepayment penalties. We are talking about a prepayment amount of max. 4,000 EUR.
I would have to provide a confirmation from the currently financing bank stating that no prepayment penalties will be incurred upon repayment. In my opinion, there are two simple solutions:
(1) I pay the prepayment penalties in cash and confirm this to the bank – no problem for me
(2) I repay the entire relevant loan (approx. 120,000 EUR) in cash – also possible for me
Regarding (1), the broker says that the bank generally does not mediate contracts where a prepayment penalty applies. Can that be true? Why does this information come only now, practically a month after submitting the application?
But that would only be possible by submitting a new application at the currently valid interest conditions (1,x%, 10 years term). The previous application would be closed due to rejection and no longer accessible under the previous application conditions with an interest rate of 0.8%.
Regarding (2), the broker says the bank would be willing to finance, but here as well only by submitting a new application at the currently valid interest conditions.
My question: is the behavior of the bank industry standard? The rejection of the application seems very arbitrary and contrived to me. What can I do?
Can I demand the bank to reactivate the rejected application if I repay the loan to be paid off early in cash? Or am I completely at the mercy of the bank's arbitrary decisions regarding loan approval or rejection?
The broker says reactivation of the rejected application under the February conditions is not possible. If the latter is the case, then this approach seems like an unfair bait-and-switch offer to me.
This is in contrast to the statement I received today in a direct phone call with a construction loan advisor from the same bank – although he could not review the specific case because the application was made through a broker, he mentioned two solutions:
(1) the previous bank issues a letter stating that no prepayment penalties apply
(2) I take out a forward loan with the new bank for this loan running until 2025
In both cases, he sees no reason why I could not then resolve the problem to receive loan approval under the application conditions.
My broker says this is not possible. What is correct and what should be done now?
today the day has come when I urgently need your collective wisdom:
On February 6th, I submitted a loan application at a large nationwide bank (a mix of a follow-up loan for several construction loans with fixed interest expiring in March & capital procurement for free use) with the following conditions:
Loan amount = 1.8 million EUR
Term = 10 years
Interest rate = 0.8%
The application was made through an independent loan broker. All documents requested by the bank during the application process were submitted on time. At all times since the application was submitted, the broker assured me that I could expect loan approval based on the submitted application documents. The traffic light was green.
Additional info: one of the loans to be repaid has a term until 2025. I want to repay this loan early – I have a corresponding confirmation from the currently financing bank, and this confirmation was also forwarded to the new bank. The wording in this confirmation is:
"We confirm that approval for early repayment of your loan xxx as of 03/20/2022, taking into account a prepayment penalty, is granted.
On March 7, 2022, I was informed by the broker that the loan application was rejected by the bank because the bank cannot refinance contracts with prepayment penalties. We are talking about a prepayment amount of max. 4,000 EUR.
I would have to provide a confirmation from the currently financing bank stating that no prepayment penalties will be incurred upon repayment. In my opinion, there are two simple solutions:
(1) I pay the prepayment penalties in cash and confirm this to the bank – no problem for me
(2) I repay the entire relevant loan (approx. 120,000 EUR) in cash – also possible for me
Regarding (1), the broker says that the bank generally does not mediate contracts where a prepayment penalty applies. Can that be true? Why does this information come only now, practically a month after submitting the application?
But that would only be possible by submitting a new application at the currently valid interest conditions (1,x%, 10 years term). The previous application would be closed due to rejection and no longer accessible under the previous application conditions with an interest rate of 0.8%.
Regarding (2), the broker says the bank would be willing to finance, but here as well only by submitting a new application at the currently valid interest conditions.
My question: is the behavior of the bank industry standard? The rejection of the application seems very arbitrary and contrived to me. What can I do?
Can I demand the bank to reactivate the rejected application if I repay the loan to be paid off early in cash? Or am I completely at the mercy of the bank's arbitrary decisions regarding loan approval or rejection?
The broker says reactivation of the rejected application under the February conditions is not possible. If the latter is the case, then this approach seems like an unfair bait-and-switch offer to me.
This is in contrast to the statement I received today in a direct phone call with a construction loan advisor from the same bank – although he could not review the specific case because the application was made through a broker, he mentioned two solutions:
(1) the previous bank issues a letter stating that no prepayment penalties apply
(2) I take out a forward loan with the new bank for this loan running until 2025
In both cases, he sees no reason why I could not then resolve the problem to receive loan approval under the application conditions.
My broker says this is not possible. What is correct and what should be done now?