Home Loan Agreement: With the ongoing flurry of activity and festivity
prevalent in the home loan segment of India recently, a large number of people,
in the euphoria to acquire that dream house, tend to overlook some of the most
important clauses in the home loan agreement. However, what they don’t realize
is that these clauses have a significant bearing on wide number of areas
ranging from interest rates to repayment schedules.
Some of the simple clauses of the home loan
agreement regarding to simple matters, such as how often the housing finance
company resets interest rates in a year can make a considerable impact on the
floating rate home loans. The norms in
the industry practices suggest that interest rates for home loan consumers are
reset only when the bank’s prime lending rate is changed.Therefore it is the frequency of these resets
that is really important. Some of the finance companies offer home loan
agreements wherein the interest rates are reset in each quarter. Alternatively,
there are other companies who do the revision only once a year. Sadly not many
home loan consumers are aware of the clause related to the fixed rate homeloans, which the financial companies some times insert in their home loan
agreement.
This ignorance can cause the customers unintended
losses in case of revision of the fixed rate home loan rates. Most of the customers
are not aware that this particular fixed rate clause in the home loan agreement
permits the financial institutions to change the loan’s repayment schedule and
terms and conditions.
The financial institutions
in a rising interest rate environment might exercise this option in order to
safe guard themselves and in the interest of their own company. This move is
usually not in the best interests of the customer or the home loan seeker as
the modification of the repayment schedule, terms and conditions might affect
the overall repayment of the consumer. The long list of terms and conditions of
the home loan agreement, usually contain clauses which might possibly have a
number of significant implications for the consumer and therefore it is
important that the consumer is aware and makes an informed choice accordingly.
More,
No comments:
Post a Comment