Monday 4 March 2024
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Important Factors to Consider Before Signing Loan Agreement

Important Factors to Consider Before Signing Loan Agreement

If you are looking to purchase your dream home, a home loan can be of great financial aid. Instead of liquidating all your savings, availing a home loan is always a better option. You should always look for a home loan with the best interest rates, flexible repayment options, and zero collaterals. Also, you should review the financial institution you are opting for before you apply for your home loan. However, before you sign a loan agreement, you should go through it carefully and understand its clauses in detail. Since a loan agreement is a lengthy document running into pages, many borrowers do not spend enough time on it and consider it as a formality. This can lead to major problems in the long term. Below is a list of things you must consider before signing a loan agreement.

Interest fluctuation clause:

Interest fluctuation clause gives financial institutions the right to fix the interest rate as per their base rate fluctuations. In the case of a home loan, banks and other financial institutions can alter the interest rate without seeking your approval as and when they change their base rate. Therefore, it is important to read the terms and conditions of this clause.

Disbursement clauses:

Financial institutions disburse the loan as per their disbursement clause. You should go through it carefully before signing the loan agreement.

Force majeure clause:

Force Majeure Clause also called as Money Market Condition clause, enables the loan-provider to unfix the fixed interest rates for your loan. Therefore, if you think that a fixed rate loan will remain fixed forever, you should go through this clause to avoid later disputes.

Reset clause:

Some fixed rates come with a reset clause. This clause applied by the loan-providers allows them to reset the rate to a higher level after 2-5 years if interest rates at that time show a rising trend. Financial institutions usually offer a fixed rate of interest for a limited period only. Following which, they hold the right to reset the interest rate.

Debt collection by third parties:

Third-party collection agencies collect debts on behalf of financial institutions. Many loan-providers have this clause in their loan agreement for recovery of the dues. This clause allows the financial institutions to disclose your details to any third party without informing you.

Amendment clause:

Amendment clause gives the financial institutions a right to amend any conditions of the loan without informing the borrower. Legal experts believe that the amendment clause has a big legal loophole as it allows the financial institution to change the terms and conditions without seeking the approval of the borrower. Therefore, if you notice any amendment clause in your bank loan agreement, read it in detail.

With Finserv Markets, you can avail the best home loan in a quick and hassle-free manner. The experts at finserv markets provide round-the-clock assistance and help the borrower understand the terms and conditions of the loan agreement in detail. If you are looking for a home loan, Finserv Market is certainly going to provide you with best deals. So, what are you waiting for? Avail home loan with Finserv Markets, today.

Finserv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!