Two brothers were shocked to discover a major Australian bank is still charging thousands of dollars in interest on a loan taken out by their deceased parents.
Mark*, 61, said his parents borrowed $85,000 in a reverse mortgage loan with St George two decades ago with an interest rate currently at 6.32 per cent.
Documents show the loan has now quadrupled to $415,000, and monthly interest rates of $2,500 continue after his 92-year-old father died in May.
The brothers lost their mother several years before their father.
“When dad passed away, it was $401,000, so it’s gone up almost $15,000 since dad passed away,” the school teacher said. news.com.au.
He said neither he nor his brother have the ability to borrow enough to cover the loan, meaning their only option is to sell the property.
“It’s just ridiculous that those kinds of loans were allowed to happen in the first place and they can’t put an end to them,” he said.
‘I hate injustice, and this is an injustice. It just burns me out, not just that it burns me out financially.
St George’s reverse mortgage loan started at $85,0000 and has quadrupled to $415,000
He said his parents had taken out the loan simply to pay for a car and do some work around the house.
“(But) now they could have bought a Ferrari with the loan amount,” he said.
“The kind of loan they no longer offer because they know it’s predatory.”
St George confirmed to Daily Mail Australia that it no longer offers reverse mortgage loans.
The bank said it stopped offering reverse mortgages, where homeowners can borrow against part of the equity in their property, after a review of its products in 2017.
A spokesperson for St George did not explain why this type of loan had been ruled out.
“We always mourn the death of a client and have a team of specialists available to assist families in the estate management process,” the spokesperson said.
“Our teams work closely with surviving family members or executors to help them understand the financial situation of the estate and what is required to move forward.”
St George has confirmed to Daily Mail Australia that it no longer offers reverse mortgage loans following a review of its products in 2017 (pictured, a St George ATM in Brisbane)
Interest continues to accrue on a loan taken out by Mark’s deceased parents (pictured)
Mark said he accepted the loan needed to be repaid, but could not understand why St George’s refused to stop charging interest on a deceased person’s account.
“The smaller goal would be to eliminate any interest from the date of Dad’s death and that way it would be back to about $400,000 and then we would know that we don’t need to rush to sell the property,” he said.
“Because the longer it takes for the property to sell, the more impact it will have on my brother and I. It’s actually driving me crazy.”
Mark said there was a delay in the sale of the house, which was built by his grandfather 100 years ago, as the family is still waiting for probate to be granted.
St George merged with Westpac in December 2008. Westpac Banking Corporation’s H1 FY2024 cash profits were a whopping $3.5 billion.
*Name has been changed for privacy reasons.