So you have your home loan application approved. Have you taken the time to peruse through your home loan contract or have you just skipped through it?
If you skimmed over your home loan contract, then you are one of the rather numerous home buyers who fail to pay the necessary attention to the contents of your home loan contract after approval and official settling of the mortgage.
While it may be true that reviewing your home loan contract can be daunting and challenging, but the importance of carefully reading and understanding every aspect of the contract can not be underscored. It is always in your best interests to understand the specifics within the contract and you can do so if you allocate the time to review it.
You will benefit a great deal if you read every detail of your home loan contract – it can help you gain a much clearer understanding of your mortgage in order to avoid any unwanted surprises along the way, although it might be the last thing which you would want to do with your mortgage already settled.
After all, it is your signature affixed on the home loan contract, which means you have come to an agreement, legally, to everything which it states. Now you want to ensure you know perfectly well what details and stipulations you are agreeing to and committing to. You will want to double check what you agreed to in your mortgage contract.
Basically, a home loan contract is a document presented and offered to you by your creditors which states the terms and conditions of the mortgage.
The main sections of a home loan contract. You will find in the home loan contract the amount which you asked to borrow, the monthly amortization, and the interest terms and rates. The contract will also state the lifespan of the mortgage and when the completion of total payment of the residential property will be expected of you.
The aforementioned are the highlights of a home loan contract which are easily underscored, noted and checked. They are some of the most important specifics in a mortgage contract. Certainly don’t take them lightly.
The other fees. However, there are other parts of the home loan contract which you will need to pay close attention to. These include the listing of the applicable fees which you will be asked to pay during the processing of the loan and even thereafter. It will be stated, too, which ways these fees can be paid for, via bank checks or bank deposits, among other modes of payment.
If you understand these other inclusions and fees stated in the contract, you will better understand your obligations as a borrower to your creditors and in turn, you will be able to responsibly conform to, comply with and act accordingly depending on what your lenders ask of you. You will be able to repay as agreed and meet the requirements as stated in the contract.
What happens next after reading and agreeing to your home loan contract. If you are satisfied and you fully agree with the terms and conditions in the home loan contract presented to you, you may then proceed with the mortgage by returning the signed contract to the lender’s solicitors.
While there are parts of a home loan contract that are standard and remain the same for every debtor, policies can vary from one creditor to another in the actual contract per se, i.e., the document which has details, information and data specific, unique and individual to your home loan.
This is the section dedicated to specifying the details about you as a borrower. It is crucial that you check, validate and verify each detail as it pertains to you. Make sure your name is written and spelled correctly, that your address is complete and current, and that your contact details are updated.
This is very important because the name of the debtor on the mortgage contract and other significant documents will need to match the name on the transfer of the land title which the solicitors will officially register with the land titles agency or office.
It is important to note that any discrepancies and inconsistencies especially with the borrower’s name can result in the mortgage contract being legally null and void.
The financial table will include all monetary information and aspects of the home loan thoroughly enumerated and detailed.
The amount of credit and the repayments. It is crucial for you to confirm that the home loan amount stated in the contract is the quantity which you have agreed to during your conversations and negotiations with the broker or lenders.
You will not want to sign a home loan contract and get yourself into a mortgage commitment which you cannot afford. This is the reason why it is crucial that you, as a responsible borrower, should confirm you can afford the repayments which you have agreed to with the lenders and which are accurately stated in the home loan contract.
Annual percentage rate. This is the current interest rate included in the amount to be paid for the residential property.
Other fees and charges. Under this section of the home loan contract, you will find the disclosure of every fee and charge which you will have to pay relevant to the terms of the mortgage.
There are bank fees which can include the application fees and valuation fees. The government fees will also be disclosed under this part of the contract such as mortgage registration fees.
You do not have to be alone when reviewing your home loan contract and especially when deciphering the more technical sections of it. You can always hire the professional assistance of a solicitor or conveyancer to help you peruse through the documents pertinent to your mortgage which your lenders presented to you, from the terms and conditions to the actual contract itself.
That is your right. These professionals should be able to translate to you any key technical terms, in plain language you can understand. So do not hesitate to ask questions when in doubt and when some things are not entirely clear.
Remember, it’s not a cliche that there are no dumb or unimportant questions. You pay them to represent and work for you.
Check your personal details for any errors and check if the stated total amount to be paid off, together with the interest rate and the duration of the loan, all accurately match what you have previously discussed and agreed to with your lenders.
Finally, do not feel pressured to instantly sign the home loan documents. It is your right, obligation even, to review first what you will be signing because you may find details which you will need or want to be fixed or modified prior to signing.