Oct 2, 2010
Hard to spot home loan changes
IN MARCH 2004, I refinanced my HDB home loan with HSBC's Smartmortage package, which offered an interest offset feature with a linked current account.
I meticulously checked the loan terms with the bank officer and asked her why the agreement gave the bank a unilateral right to vary any condition, thereby defeating the purpose of signing a contract. Her reply was that it was industry practice.
Early last month, I wrote in to redeem the loan as I had sold my house. Later, I was puzzled to see interest debit costs charged to my account in my latest statement.
The bank replied that there was a standard term that allowed interest to be levied during the three-month redemption notice. I could not find such a condition in my loan agreement. On Wednesday, HSBC indicated where it was: in a few sentences included in several monthly statements in 2008, stating an amendment.
When a customer receives a monthly statement, his focus will be on checking the accuracy of the figures. Now he must check for amendments to the loan agreement as well.
Signing a long-term loan, such as a home loan, with a bank seems like signing a blank sheet of paper where the bank can change the conditions unilaterally at any time.
Mohamed Rafiq Hamjah
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