ABN AMRO's - All Smiles Home Loan!

Back in November 2004, after having just booked my first flat with the builder, I was looking for a good home loan deal. At the back of my mind I had this "All Smiles Home Loan" offer from ABN AMRO where the interest rates would be fixed at 6.5% for first 2 years and will be at prevailing floating rate after that. The rate of 6.5% was lowest in those times and getting it fixed for next 2 years was icing on the cake. My only worry was whether I'd be eligible for the loan or not.

Anyhow, I contacted 3 different home loan providers and finally was happy to apply for All Smiles Home Loan. But I had this worry at back of my mind that after two years bank might arbitrarily fix the interest rates so I insisted that I should be given a rate relative to bank's benchmark rate. Around a week after applying for loan I got this SMS that my All Smiles Home Loan has been sanctioned. My condition was also honored by fixing the rate at HPLR + 0.25%. I was obviously happy and felt fortunate to have loan at such a low rate of interest.

Two years quickly passed and interest rates started rising in the market. In two years time they went from 7-8% to 8.5-9.5%. I was wondering what ABN AMRO's interest rate would be. And when it came, I was utterly disappointed as it was fixed at 11.25%. This was at least 2% points more than the competitors in the upper band. I somehow took this with a pinch of salt thinking that its still a profitable deal with me paying interest only at 6.5% for first 2 years at least.

But what came after 6 months broke me completely. My loan rates were bumped to 13%. All the other banks were charging interest at 10-11%. I checked at their website and HPLR was 12.75%. I had no case to argue...

I still hoped that my bank will also reduce my EMI as prevailing interest rates come down. They did for sure... from 10-11% to 9-10% but my 'floating' rates seemed to have struck an ice burg at 13%. I felt deeply betrayed and it would not be exaggeration to say that...

My smile was taken away by All Smiles Home Loan of ABN AMRO bank!