Impossible to answer without knowing what terms were agreed in the contract for the loan.
Original contract was taken out in 2003 for 500,000 euro on a 20 year term commercial loan with the first 5 years interest only, then reverting to capital and interest payments over the remaining 15 years term. In the loan offer it states Term: 20 years from date of drawdown. It was a 3 page document with the terms and conditions stated within (no T and C booklet).
In the t and c’s it states;
“The above facility and the terms and conditions attaching thereto are subject to annual review with the first review to be no later that 12 months after drawdown.”
In 2009 and not 12 months after drawdown as stated in the contract the bank wrote to me and stated;
“The Bank is pleased to renew the facilities below subject to the terms and conditions set out in this facility letter and subject also to the Bank’s Standard Terma and Conditions Governing Business Lending to Individuals- Business Banking (Ref 01/2007) (the General Conditions) a copy of which is enclosed. These are legal documents should be read carefully.
The loan is then described as a Demand Loan Facility.
Purpose: Continuation of demand loan facility.
This is my issue, the original loan was a term loan for 20 years. Was the Bank within its rights to write out to me and “renew” my facility by replacing the term loan with a demand loan? Was this in fact a re-finance of my loan?
There was no default on the loan.