Important Clauses to Check While Taking House loan
Posted by nikhil294 on October 3rd, 2016
While taking a House loan, you should carefully read and understand the terms and conditions mentioned in the agreement. The loan agreement consists of a number of clauses. These clauses may or may not be in favour of the borrower. So, one should carefully go through all the clauses mentioned in the loan agreement in order to avoid falling in traps. Some of the possible clauses are mentioned below:
Penalty for Prepayment of the House loan:
Some banks mention a clause regarding prepayment of the loan before the agreed period of time. Some banks feel that prepayment of loan disturbs the cash flow of the bank and their estimates of income. For this reason, some banks used to put penalty if the loan is re-paid before the specified time frame. This amount may vary from 1% to 5% of the outstanding loan amount. There are also some banks which do not put penalty for prepayment of the loan amount or foreclosure.
There will also be some clauses regarding the transfer charges. You may decide to transfer your loan from one bank to another at some particular time for some reasons. Some banks charge a penalty for such transfers. Some banks also restrict the borrowers from leaving India for a long term before repaying the loan amount.
Penalty for Delay in Payment:
There may be a clause for delay in payment of EMI or cheque bouncing. Bank charge some penalty for such kind of activities. Some banks mention a clause that if a borrower changes his job, he must inform it to the bank.
Date of Disbursement of the loan:
In the House loan agreement, there will be a clause regarding the date of disbursement of the loan. In some agreements they mention the date of disbursement of the loan amount same as the date of the cheque. Some specify the date when the actual transfer of funds take place as the date of disbursement. Because of this difference in the dates, sometimes it happens that the borrower has to pay the interest for some period even before he receives the fund.
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