The strategic ways through which borrowers can cultivate their sense of handling house loans and set themselves up for paybacks require an understanding of the content of the home loan agreement. The core problem in handling those home loan issues is finding a good resource to handle them. Once you find a good resource to let you understand the loan requirements, you must read the home loan agreement before the process advances. Name and address of the parties, principal amount, total amount repayable, interest rate, terms and conditions with legal bindings are the key components of a home loan agreement but the main clauses to ponder gravely are the interest rate sections.
Rate of Interest:
The rate of interest has two options. Either it is a floating rate or a fixed rate. In addition, another type of interest rate has emerged which is known as a teaser loan. The teaser loan is said to cost you less in the initial years. The base rate clause will define the floating interest as no bank is allowed to lend a loan lower than the base rate. It also determines the Spread which is the premium, the bank charges from customers. In fixed interest, the banks are allowed to reset the fixed amount in accordance with the market base rate. In some exceptional cases, banks are allowed to increase the interest amount. Some banks include a pre-paying penalty clause and will not cater to the pre-payment mode if you want to clear the dues early. There are clear-cut clauses about expected faults that mean the non-payment of EMI at certain phases of tenures. However, a fault can also denote the expiry, divorce, and other situations that may create a non-payment atmosphere. It is therefore essential for the borrower to comprehend the exact meaning of Fault. Through the security clause, the bank is allowed to demand some extra security charges when the price of the property is steadily declining. You might be claimed as a defaulter if you have not paid those security charges.
If you are deciding to acquire a teaser loan then keep in mind to analyze the payment scenario for longer years like five to ten years as many borrowers just opt for this loan because of the initial lower interest rate which later increases progressively according to the market trend. The problem with the floating rate is that it increases with the RBI’s increment but does not get lower fast. It is recommended to pick a floating medium rather than a fixed and you should talk about the pre-payment penalty clause with your lender. It should be clear how this penalty affects you if you are in the mood for refinancing. It is very essential to keep every minute of the meeting and decision in written records and as RBI does not welcome prepayment penalty, try not to spend any penalty on such modes. You must assess through a rough estimate how much the teaser loan demands for the long-life interest and if you find it worth you can take the teaser loan and the base rate could be lower according to the market conditions, therefore be vigilant while reading all those interest rate application clauses. Discuss with your attorney and keep everything in writing to present as documented proof in case of conflicts.
Free Housing Loan Contract Templates:
Here is a preview of This First Sample Housing Loan Contract Template created using MS Word,
Source: networkkansas.com
Here is a preview of another Sample Housing Loan Contract Template created using MS Word,
Source: doctemplates.net
Here is a preview of another Sample Housing Loan Contract Template created using MS Word,
Source: doctemplates.net
Here is a preview of another Sample Housing Loan Contract Template created using MS Word,
Here is a preview of another Sample Housing Loan Contract Template created using MS Word,
Source: wordstemplates.org
Here is a preview of another Sample Housing Loan Contract Template created using MS Word,
Source: doctemplates.net
Here is a preview of another Sample Housing Loan Contract Template in PDF Format,
Source: leaplaw.com
Here is a preview of another Sample Housing Loan Contract Template in PDF Format,
Source: finance.mo.gov
Here is a preview of another Sample Housing Loan Contract Template in PDF Format,
Source: fanniemae.com
