Many borrowers view home loan contracts as long-winded and boring. While others may find the home loan contract difficult to understand. This, in turn, often causes confusion and frustration with many borrowers not reading the home loan document in full. Therefore, they often miss reading the fine print as they speed read their contract or skip over the details before signing the document.
Not reading a home loan contract in full can mean that you are agreeing to terms that you were unaware of, or that you are agreeing to pay additional expenses. This can be costly in the long-run, both in a financial and emotional sense, as many borrowers have not accounted for these additional contract conditions.
How to Avoid Paying More By Reading the Fine Print
To avoid paying unexpected expenses, it is important that you read the fine print of your home loan contract. Why? As many lenders put additional fees and terms and conditions within these sections of a contract. For example, the fine print may include exit fees, and how and when these fees come into place. But, if you have not read this and you decide to change home loan providers, before the date specified in the contract, you may be liable to pay a costly exit fee. Exit fees can add thousands to the value of a home loan, so you need to be aware of these before you sign any contract.
What Do I Need to Read in the Home Loan Contract?
To ensure that you don’t get caught out, make sure you check the following details before you sign the home loan contract:
- The name of the lender who is offering you the finance. If this differs to the name of the company that you are currently dealing with, then ask why this name is different. Find out more about the other company before you agree to sign the contract.
- The details of the home loan. Make sure your personal details are correct, as well as the address of the property that is being financed. If these details differ to those that you have specified then make sure these are changed.
- Fees and charges. Make sure you know what the costs of the home loan are such as fees and charges, and when these are payable. Also check to see if any payments are deferred and if so, when these are expected to be paid. This way you can budget suitably.
- Commissions and other charges. Know what commissions and insurance premiums are or are not included in the contract, what fees are associated with these, and when these are payable.
- Payment default. Make sure you know what happens if you cannot meet repayments. Ask about the fees that are incurred and if you are you charged these in addition to your repayment fee. Also ask if your rate of interest becomes higher when you default on payment.
- Direct debit. Ask if you can have your home loan repayments directly debited from a nominated account and if any fees are charged for this service.
- Account statements. Know when you receive account statements and ask if these disclose interest rates and other charges, as well as other home loan details.
Do you want to know more about the home loans? Then contact eChoice and find the right home loan for YOU today.
Written by eChoice