Generally, a home loan agreement is a government document that includes all the terms and conditions for your home loan. All these terms and conditions are determined by the lender. When you take a home loan, you sign the loan agreement and agree to the lender. You believe in the written terms and condition that is provided to you by the lender.
In these days, most people consider this document agreeing to be a small formality to get approved for a home loan. However, it is much more than a small formality. If you sign it without understanding it, then there can be a big problem in your future. If you have signed a home loan agreement to purchase a home loan then you are obliged to abide by all the terms and conditions. Therefore, you are advised not to sign a home loan agreement as a formality. Rather, you should read the whole agreement before signing it.
Here, we will discuss the important clauses of the home loan agreement which are as follows.
The entire borrower will have to send their income statement every year to the bank from where they got their home loan. If the borrower retires under voluntary retirement or resigns from employment or retires, in any of these cases, whatever amount the employer receives from the employer either as a benefit or as a settlement, the borrower must first pay that amount. All outstanding home loans will have to be settled by the amount. Thus, the remaining money or amount can be used by the borrower for personal use after settlement.
If the borrower relocates to their employer or employment, then, in that case, they are required to tell the lender about the change.
It is mandatory during the tenure of the lender to ensure the property against all risks of flood, earthquake, explosion, fire, etc.
Getting loan insurance is also recommended by many lenders and can be described in the loan agreement. Therefore, it is very important to know these facts and then sign them.
It is very important to check for part payment and prepayment clause. Nowadays, many lenders have many rules, where some lenders do not allow some.
Check all types of interest rates (ROIs) as the maximum lenders offer both floating and fixed interest rates. If you have opted for floating interest rate (FIR), then monthly EMI may decrease or increase from time to time.
During the term of a home loan, not all borrowers have the right to lease or sell the property. If the borrower is required to do so, they should seek the approval of the lender.
If you are taking a home loan then you should be sure about the duration of your house. Even the slightest confusion between you and your lender can affect your financial projects. Therefore, do not forget to look for it on your loan agreement.