“Why does the bank tell you to serve 3 months redemption notice?”
- So you decides to redeem your property, you went to the bank, and the banker tells you that they need you to appoint a law firm to serve a 3 months notice to them.
- What is this 3 months notice about? – This is to forewarn the bank that you will be redeeming/refinancing the loan.
- Why does bank need 3 months notice? – The bank need to retrieve your records and compile your outstanding loan at this moment in time, at the end of the 3 months, the bank will need to give u a final redemption figure and also return you the title deed.
- Is it always 3 months notice? can it be shorter?
- Yes, it can be shorter if you pay interest in lieu.
- What is a interest in lieu? – The word lieu originally comes from the Latin locus, meaning “place” it means to replace it or substitute for. When you serve a shorter notice, it doesn’t mean that you will pay lesser interest to the bank, you will still have to pay the full 3 months interest in lieu of the shorter notice.
- How is this interest in lieu calculated? – Take your interest payable per month / 30 days then * by the number of days shortened.
Propertywiki tip 101: How to avoid paying penalties when doing a redemption or refinancing.
So you are still unsure? Do contact us if you have any further queries and we will do our best to answer it if it is not found anywhere here!