An inextricable part of the process of purchasing any home involves opting for a home loan. This is owing to the fact that purchasing a house these days costs a fortune which is neither possible nor advisable to bear from one’s savings. For this reason, there are a number of financial institutions including NBFCs (Non-Banking Financial Companies) which offer home loans at the best home loan rates in India.
Issues, however, arise when people just opt for a home by considering the interest rates. What they do not know about is that there are a number of other parameters including clauses which should be considered before deciding the lender to opt for. Some of these clauses are as follows -
Security Cover
This mandates that the loan should be covered by security for the length of the repayment tenor. In the case of home loans, it is the property being purchased which acts as security for obtaining the loan. However, if in a scenario, the real estate falls short of the required security cover owing to market fluctuations or destruction of the property, then the lender can ask for additional security from the borrower.
Prepayment
Prepayment refers to making excess payments so as to close the loan before the completion of the repayment tenor. Lenders can charge a fee for prepayment or offer this facility for free. This needs to be checked with the lender before applying.
Reference Read: Important Home Loan Clauses that You should know
