You open your morning newspaper on a Sunday morning. You plan to do nothing but chill that day and suddenly a Property advert catches your eye. Get a house with no stamp duty, registration no GST and many more, the offer is shown to be valid only for a day. You think, the offer is to mouthwatering to let go. So, you pick your phone dial the mentioned number and make the call. The property representative tells you only good things about the property and you are sold. You go for a site visit, you like the locality it’s absolutely perfect!

You come back home and start exploring options to buy this house. You consider getting a home loan and start exploring loan options online because you are confident of your great cibil score which will help you negotiate on the loan terms.

You make the down payment, because you are smart, you get the best home loan option available in the market with help of your research. Everything is sorted and now you are just a few signatures away from owning your property. But wait! Is that it? What happens after? You make all your payments on time and get the loan closed?

You are missing on one of the important factors in the home loan buying process. The loan documents! Yes the loan documents. Just like signing up for any online account without reading their terms and conditions we tend to sign wherever the banker says us to sign, out of peer excitement to own a house. So is it that important to read all terms mentioned on the agreement? How can it harm me on the long run?

Today we will sight you some pointers why checking your loan agreement is important before you sign it,

What is the start date of the loan and how much should I pay?

You can end up buying your house in various circumstances. The property maybe under construction or can be in ready possession. You get a bank loan for either one, but the terms of repayment is different in each scenario. If you buy a property during its construction, you will have to pay EMIs for the slab installments provided to the developer on your behalf by the bank. On the other hand you will have to pay full EMIs from 1^st month if you have booked a property which is ready possession.

Make sure all the borrowers are listed

Before you sign the agreement, make sure all the co-borrowers are mentioned on the document with the guarantors. It is very difficult to change things once you have signed off.

Check if you have the right to sell your home

Sometimes the loan agreement comes with a term stating you can’t sell the property for a fixed amount of time. You should have the power sell the property as when you like. The time mentioned is usually from 6 months to a year.

Find the pre-payment penalties

This is the trickiest part of the document. The pre-payment charges vary from banks to banks and from loan types. Sometimes paying off your loan can be more expensive than to maintain it. Have a clear idea what these charges are and then sign the document.

Look for balloon payments

If you happen to mention that you have a big amount incoming during the loan tenure to the bank, they might put it on the document and you can be a victim of a balloon payment. If you have made the signature without understanding the balloon payment clause, it can cost you your home.

Loan transfer clause

Do not fall for this! You should have the power to transfer your loan according to your convenience. Do note, when you decide to balance transfer your home loan, there are banks who would give you attractive offers just so that you can bank with them. Before you think of balance transfer get your free credit report online and check your credit score, so that you can have the upper hand on the negotiations.

If you are not much of a reader or do not understand the banking terms, you can hire a professional who can help you in this regards.

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