This is a good time for home buyers, with several lending institutions slashing their home loan rates recently. Home buyers have a tendency to skip through the details of a home loan agreement. That should not be the case. Borrowers need to keep in mind a few key clauses while signing the agreement to avoid unpleasant surprises later.
Cross-collateralisation of other loans: Imagine a scenario where you have taken a personal loan as well as a home loan from the same institution. Without your knowledge, you could have actually given your home as collateral for the personal loan. Some lending institutions have an ‘Indebtedness of the Borrower’ clause where the home is automatically made available as a security for all past, present and future borrowings of the borrower with the same institution.
