Learn About Clauses in Home Loan Agreements and How They Work?
Every loan you take comes with its predefined set of clauses either set by the lending agency or agreed upon between the parties involved. A Home Loan is a major responsibility that can take up to 20 years or more for repayment, which is precisely why you need to go through your Home Loan agreement and its clauses meticulously to stay on the safe side.Below are some of the most commonly seen Home Loan clauses in India that can help you with your future home purchase.
Fixed Interest Rate Clause
Wondering how you should move forward with your Home Loans? Nowadays, almost all the banks offer fixed rate of interest on Home Loan for their customers. These types of loans help you avoid the sticky situation brought about by fluctuating interest rates. The way these loans work is that their rates stay fixed for the first two to three years of the repayment schedule, after which the banks are free to reset the interest rate based on their requirement and the market condition.
Acquiring Other Balances
Consider you have borrowed a Home Loan from a lender you are already doing business with, courtesy a fixed deposit or a savings account. If you are falling behind on your repayments, the bank can add a clause in your loan agreement wherein they acquire the interest rates that your accounts gather in order to pay off your EMIs. This can be seen in many Home Loan agreements in India and it is completely legitimate. NBFCs like Bajaj Finserv offer easy Home Loans with up to 3 EMI holidays a year.
Additional Security Clause
Among the many clauses for Home Loans, this is one that most financial institutions include in your agreement. This clause is activated when the collateral you have provided sees a rapid decline in its value and bankers need another property to substitute it. Note that, this situation can arise despite you adhering to the repayment schedule with timely EMI payments. In need of an EMI calculator, financial institutions like Bajaj Finserv offer Home Loan EMI Calculator to help with your calculations.
Approval for Further Loans
What this clause implies is that you will have to get a consent or an NOC from a particular lending institution before you can opt for another loan. Lack of an NOC can also affect your chances with regards to availing a loan in the near future.
Sometimes you can find some unconditional clauses wherein banks have a right to amend the terms of your loan agreement, irrespective of your compliance to the predefined norms in the fine print. Banks also have the complete right to terminate, recall or make any change deemed necessary by them.
There are a number of clauses involved in a loan which can steer the direction of your financial security. In case you are looking for a risk-free Home Loan, financiers like Bajaj Finserv, provide financial support for your home at affordable interest rate. So you can apply online for a Home Loan that comes with instant online approval schemes.