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. 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. 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. Most home loans are paid directly to the owner and not to the client.
Therefore, the client should ensure that this clause is carefully read before proceeding with any conjecture and plans. If it is mentioned that a transfer is made, the money will be transferred to another bank. I hope you found this article about “important clauses in a loan contract” useful. Share your thoughts in the comments section below. 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. The term “advance” refers to a refund that goes beyond the amount of the ME set out in the agreement.
Typically, these surpluses are settled with the outstanding principal at the time of payment. The amount of the advance may be only a fraction of the loan amount or the total loan amount. The clause defines the financial impact of these advances that must be made. 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 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.