Home Loan Agreement: An important aspect of your loan
By Joseph Samson
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Defining a Fault: ‘Fault' for lay-man often means a non-payment of an EMI during the loan tenure. However the bank or housing finance companies have a different meaning for this term. The home loan agreement of some bank defines fault as a case when the borrower expires or if the borrower is divorced in case the loan is extended to more than a single person. Default may also be referred to a situation when the borrower or any of the borrowers is or are involved in any civil litigation or criminal offence. Thus you must be clear what your lender means by the term fault.

Security cover at times of falling property rates: This states that that a bank is eligible to demand for additional security when the property prices fall. Even if you are loyal on your EMI payments, this point demands a security cover in addition to your loan amount and if a person fails to provide such a security then he may be declared a defaulter by the lender. Under such a clause the bank normally mentions that it is entitled to declare all sums outstanding under the home loan (including the principal, interest, charges, expenses) to become due and payable immediately if the value of the property or any security kept by the borrower depreciates.

Hence if you are planning to finance your home purchase through a home loan then you should always decide on the best lender and thereby be clear about the clauses and conditions laid down by your bank or housing finance company. If at all you skip this task then you may face a major problem during your entire tenure of your loan or may be even beyond that.


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