What is a home loan agreement
A home loan agreement is a document on which all the terms and conditions of a home loan are written. These terms and conditions are decided by the lender and by signing this loan agreement, you accept all the terms and conditions of the lender and follow them throughout the loan period.
The clause included in the home loan agreement includes the payment of ‘defaults’ and clearly indicates your loan obligation. Often, people consider signing this document a formality, so that they can get a home loan. But, it is more than a formality. If you have signed it without understanding it then there may be problems in future. Once you sign the loan agreement, you will have to follow all the terms and conditions as well as meet the financial requirements involved in it. Therefore, do not sign the home loan agreement as just a formality. Please read it carefully first.
Important sections of the home loan agreement
– The bank from which the home loan is taken, the customer has to send a statement of his income every year.
– If the customer retires or resigns from the job or takes VRS, in such cases, all the money that the customer will get from the company as a settlement or benefit, the first home loan is owed to the customer. Have to be completed. After completion of this settlement, only the remaining money can be used by the customer for his personal needs. If that amount is not enough to meet the arrears of home loan, then it will be the decision of the lender how much money the customer will have to repay.
– If the customer changes his job or company, then he will have to tell the lender about this.
– Lenders will have to ensure the property during the entire loan period from risks like earthquake, fire, flood and explosion etc. It can also be called structure insurance or property insurance.
– Many lenders recommend loan insurance and it is also included in the loan agreement. Take special care of these things and sign after this.
– You cannot rent the property during the loan period without informing the lender.
– During the loan period, the lender has the right to inspect the property at any time without asking you.
– The rules related to penalty in the loan agreement should be clear that how much you will be charged if you default.
– It is also very important to check the prepayment and part payment rules. Different lenders have different rules. Some lenders allow anything, do not give anything. If allowed, you should know about the fee how much burden it will put on you.
Make sure to check your interest rate type because most lenders offer fixed and floating interest rates. If you have chosen a floating interest rate, then your EMI will decrease or increase from time to time. This is an important thing to consider in your home loan agreement.
The customer does not have the right to sell or lease the property during the loan period. If it is necessary for the customer to do so, then he must first get permission from the lender.
– If you want to make some changes in the property for which you have taken a home loan, then for this you will also have to tell the lender.
– The customer cannot leave India without repaying the loan. Good for travel but not for job or business.
– Be sure about the duration of the home loan. Home loan is long term only and a little mess between the customer and the lender can spoil all your planning. Therefore, definitely check this thing on the loan agreement.