Reading and understanding home loan documents - Rupeetalk.com answers it all

Online, June 2, 2010 (Newswire.com) - Home loan today are almost inevitable when buying a house or property. Home loan provides you the necessary funds required for purchase of a property without disturbing your financial schedule be it saving or expenditure. Home loans are provided by banks/housing finance institutions to potential borrowers at nominal interest rates. The loan amount i.e. the principal along with the interest is paid to the lender in Equated Monthly Instalments (EMIs) by the borrower over a period of time.

Though the process seems extremely simple and convenient for a borrower there are several pitfalls which a home loan borrower should be aware of in order to avoid nasty surprises in the future. Though these pitfalls actually clauses are pre-mentioned in a home loan agreement, ignorance on the part of borrower overlooks them in turn exposing himself to shocks and surprises with respect to his home loan. Thus it is indispensable for a borrower to read his home loan agreement meticulously before giving it his approval.

Rupeetalk India is a finance dominated website, offering various financial products and solutions to consumers. The website includes array of financial products like home loan, personal loan, car loan, insurance, stocks, fixed deposits, etc. The website contains useful and relevant information on these loans and insurance products which help users compare them and accordingly decide on the product of their choice.

Home loan agreement has several clauses which a borrower should be aware of before giving it his approval. These clauses also referred as pitfalls could reap nasty surprises for borrower in future or during later stages of his home loan repayment if gone unnoticed.

Listed below are the clauses that a borrower might notice in his home loan agreement but is unaware of its impact on his loan repayment,
• Reset Clause on Fixed Rates- The term "Fixed Rate" implies that the rate of interest is fixed. However the tenure or time for which it is fixed should be known to a borrower. Fixed rate is assumed by few home loan borrowers to be fixed for the entire loan tenure. However, that is not the case. Most of the fixed interest rates have Reset Clause attached to it which allows lenders to modify the interest rates after the initial fixed rate tenure or even during the initial tenure.
• Force Majeure Clause- This clause implies that banks and housing finance institutions can change their interest rates under exceptional circumstances. Although exceptional circumstances are not explained in detail, the clause gives lenders the liberty to change interest rates at will thus surprising borrowers who are of the mindset that their interest rates are fixed for the entire loan tenure.
• Defining a Fault- Defining a fault would be referred by most borrowers as default in the payment of one or more instalment. However the actual meaning of the clause implies
1. Where the borrower or where the loan has been provided to more than one borrower, any of the borrowers is divorced or dies (applicable in case of an individual)"
2. "if the borrower or any of the borrowers is/are involved in any civil litigation or criminal offence."

• Security cover at the time of falling property rates- This clause implies that although the borrower is paying his monthly instalments, bank or the lender has the permission to ask the borrower for any of his asset or a particular asset to be kept as security in case the lender feels that the property prices are reducing drastically.

Rupeetalk.com contains important articles and guides on home loan agreement which acts as a helping hand for borrowers in understanding vital aspects of a home loan agreement. The website also contains few tips which can be utilised and implemented by borrowers to understand home loan agreement and it clauses to the fullest which could save them from future surprises with regards to their loan.