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. 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. Understanding the important terms of a loan agreement is essential. A loan agreement is a complex document, and it is an agreement with the bank that customers sign to get their home loan.
Many borrowers view this step as a mere formality and tend to overlook what is said in this lengthy document. It is a good idea for the customer to require a softcopy of the agreement and carefully review the terms of the loan agreement. I hope you found this article about “important clauses in a loan contract” useful. Share your thoughts in the comments section below. 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. If you need more information on this topic, check out our extensive home loan guide for first-time homebuyers in India. This clause gives the financial institution the right to amend any clause in the loan agreement they wish without informing the borrower. Any amendment clause should be read and understood in great detail. Although default is generally understood as non-repayment of the loans used by the bank, different banks have different definitions of default. By extension, the default may mean that the borrower has expired or divorced, the latter being applicable in the case of a joint loan.
It can also mean that the borrower is involved in civil or criminal proceedings. A cross-default is a default in which the borrower has not repaid the loan he owes to another bank. No party is liable to the other party if and to the extent that the performance or delay of the performance of any of its obligations under this agreement is prevented, limited, delayed or disturbed due to circumstances outside the appropriate control of that party, including, but without limitation, to: State laws, fires, floods, explosions, epidemics, accidents, acts of God, wars, riots, strikes, lockouts or other concerted acts of workers, acts of government officials and/or acts of force majeure must be immediately informed in writing of other parties and, as soon as possible after the event, provide complete information on the cause or date of the first appearance , as well as keeping other parties informed of developments.