Home Loan Agreement Clauses That You Must Know!
A home loan is an excellent facilitator for all kinds of residential purchases. However, home loans come with their own set of terms and conditions that buyers should be fully in the know of before signing any document.
A home loan agreement is a legal document that details out the terms and conditions under which the loan is valid. Many homebuyers make the common mistake of overlooking this document as just another formality. However, the document details out the most important rights and liabilities of the borrower.
Here are some important home agreement clauses that you must know about:
1. Clause allowing amendments to the loan agreement:
This is potentially the most dangerous clause that can work against the interest of the borrower. Ensure that the bank requires your written consent before altering any of the repayment terms of the loan.
2. Clause pertaining to fluctuating interest rate:
Ensure that there is no clause that allows the bank to alter the interest rate as per the fluctuations in the base rate. This could lead to an unregulated hike in the interest that you have to pay to the bank.
3. Security cover clause:
This clause allows the bank or lender to call upon a third party to serve as a security cover in order to safeguard the loan amount that is due.
4. Notification clause:
The notification clause mandates the borrower to notify the bank or lender in case of any change in employment details, income level, address or residential status.
5. Default clause:
Make sure to examine this clause carefully, as it details out the various situations and circumstances under which the borrower will be labelled as a defaulter, and the implications that that will entail.
As a homebuyer, it is important to be aware of your rights so that the lender cannot make unlawful or unregulated use of its powers. Make sure to read the offer document carefully before signing on it.