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  • 6 Important Clauses to Check on a Home Loan Agreement
    July 13, 2018

    A home loan agreement is essentially a legal document which states the terms and conditions of borrowing a loan from a bank or financial
    institution. It is mandatory that the borrower be aware about the clauses that define the entire money lending process before signing the
    agreement.

    Here are the agreement clauses that the borrower must be aware about.

    Amendments

    These are mostly on the interest of the institution that lends the loan and the right to alter the terms of agreement in the event of difficulty
    in repayment, lies with them. The borrower should ensure that their written consent is mandatory for any changes in the terms of
    agreement.

    Fluctuating interest rates

    This clause enables the bank to change the payable interest rates as per the fluctuations in the applicable base rates. This also allows them
    to increase the rate in the future according to the increase in the market rate. Therefore, the borrower must ensure that the interest rates
    negotiated by him are clearly stated in the agreement.

    Security cover

    The lender can ask the borrower to provide additional security as a protection for the outstanding home loan amount.

    Balance amount

    A clause mentioning that the payments made by the borrower should be first adjusted against any outstanding dues as on the date.

    Notification clause

    The lender is entitled to information about any change to the employment, profession, income, business or residential address of the
    borrower.

    Describing default

    The condition upon which the borrower is considered to have defaulted should be stated in the agreement. The implications he is bound
    to face should also be clearly described.

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