If the borrower does not delay the payment of the loan to the financial institution such as banks, housing finance companies or NBFCs, the borrower reserves the right to pass on your personal data to third parties of their choice for the purpose of repaying the loan. There are many borrowers who are not aware of such a clause and who get angry when they receive calls from third parties asking for tax refunds. Any repayment made by the Customer for the loan adjusted in the first place against all other unpaid taxes, such as payment fees, penalties, transaction fees, etc., after the full recovery of these contributions, is the amount adjusted against the payment or repayment of the principal loan. This is another clause that applies to fixed interest rates. Banks reserve the right to change fixed interest rates after a period of 2 to 5 years if interest rates on that date are rising. In some other cases, a fixed interest rate is only allowed for a specified period of time. At the end of this period, the Bank has the right to change the interest rate, regardless of the trend on that date. I hope you found this article about “important clauses in a loan contract” useful. Share your thoughts in the comments section below. This clause defines the coverage provided for the loan for the duration of the loan. It is customary for the property to be acquired to be awarded as collateral for the loan granted. However, if this is not enough, which may be the case due to a market decline, the lender may require an additional guarantee, since the bank`s outstanding stock is covered.
It is a good idea for the customer to require a softcopy of the agreement and carefully review the terms of the loan agreement. This clause in principle authorizes the bank to change interest rates on the basis of its base rates. When a client borrows long-term as a home loan, the bank is free to change interest rates without obtaining the client`s consent. This can happen if banks change their base rates. A customer who received a loan before 2010 may not be known about this clause, which was implemented later. In the previous period, the primary credit rate applied to home loans. It is always important to understand that few aspects of the loan agreement, such as the length of the loan and interest rates, etc., can be negotiated with the lender. The client must therefore critically examine and understand all the important clauses of the loan agreement before putting his signature on paper. This clause is also known as the money-condition clause. Under this clause, the Bank reserves the right to change fixed interest rates in exceptional circumstances or in the event of unchecked economic circumstances. Therefore, it is not true that a fixed interest rate remains “fixed” forever.
This clause must be read and understood in its entirety in order to avoid disputes with the bank at a later date. If you need more information on this topic, check out our extensive home loan guide for first-time homebuyers in India. The agreement is developed by the Bank and it is therefore natural that its interests should be at the forefront of the document.