Rams Loans

Reporter: Belinda Wilkinson

When the reserve bank lifted interest rates twice this year.....home owners were hit hard.....but RHG customers were in for a bigger surprise, their rates've gone up six times, in six months. Leanne Liptrott has two low doc home loans with RHG. Her rate rose from 9.09 per cent to 10.44.......one point three five per cent higher since January. "We're just going up point 3 and point 2.5 every month" Holding on to the family's investment property is becoming impossible......Leanne's quit uni to take on three jobs. "If we sell now we're going to lose because the markets not probably up to what it was when we purchased the place plus the I don't know how much we've paid in interest so far probably 30 or 40,000 of interest so far."

Why can't you change to another financial institution? "Oh i wish we could....we're locked in for 3 years....if we get out before 3 years it's a 2% penalty of the total value of the loan. And although that might even be cheaper in the long run we haven't got that money to be able to pay the loan out." Without six thousand in cash, Leanne's trapped until January and August next year.

Andrena Winning's hands are also tied.....she needs five thousand to break her contract with RHG. "We didn't ask to go with RHG we had no choice, we just received the letter saying that RHG had taken over the mortgage and that was that." The increases pushed Andrena's repayments up an extra five hundred dollars a month.....she had to go back to work.

Pensioner Robyn Nesbitt says her kids've been living on vegemite sandwiches after her rate reached 10.19 per cent. Robyn fears another rise will cost her the home. "I have phoned them a couple of times I've told them I'm a single mum of three kids you know I don't have a partner they've pretty much told me that it wasn't their problem."

In a statement, RHG says the rate rises have been in line with market forces. And they said "the increases have been incremental rather in one large amount, in order to minimise the affect on customers".

Financial advisor Nick Bruining says although it seems unfair, RHG's monthly rate increases are completely legal. "At the end of the day unfortunately it's about reading the fine print of the contract and properly understanding what you're signing up for." That "fine print" in RHG's contract seems so clear now........too little too late.

Nick says "what people should be doing is having a good look at their finances almost on a month by month basis just to see what the exit costs are giong to be from breaking out of your existing loan and converting across to perhaps a lender that's got a vested interest in remaining in the market if you like and hopefully those market pressures will keep the interest rates somewhat lower."

Nick says it's best to seek help from an independent financial adviser."I think it's a period where we've got to be very careful about how we manage our finances and certainly it's a time to take stock and batten down the hatches." Robyn says "read the fine print and make sure the company you're going to go with isn't going to go under any time soon and sell you out to people who have no feelings towards their customers"