Always clarify the conditions of your loan before signing

Clarifying Loan Conditions
If taking an additional loan, ask your bank to clarify the conditions to avoid penalty charges on your first loan.
The customer alleges that he had a mortgage loan with a bank, which was scheduled to be fully liquidated in 2004. In December 2002, however, an officer of the bank contacted the customer and offered him a waiver for the Christmas season without penalty. The customer agreed to this arrangement.

The customer further states, however, that on checking to reconfirm the end-date for his loan, he was informed that penalty interest had accrued as a result of the waiver obtained over the Christmas season. In fact, the loan was extended by a further six months as a result of the penalty interest. He was told that he should not have qualified for such a facility.

He claimed that he was not informed of the additional charges as a result of the waiver. When he contacted the Office of the Financial Services Ombudsman (OFSO), the customer was advised to lodge a formal complaint with the bank and, if not satisfied, to return to the OFSO.

The customer subsequently returned to the Office to report that as a result of making a formal complaint to the bank, the bank agreed to waive the interest payments enabling the loan to be liquidated according to the original schedule. The Office however further suggested to the customer that he should obtain the waiver from the bank in writing.

Lessons Learnt

Beware of aggressive advertising campaigns by the banks, if it sounds too good to be true, it may actually be so.