What are the legal documents associated with a housing loan? What is a loan agreement?
The primary documentation 1 involved in applying for a housing loan is the loan agreement.
A Loan Agreement
is a contract signed between the buyer and the financial institution.
A Loan Agreement contains major provisions such as the terms of the loan, principal sum of the loan, interest rates, default interest rate, penalty charges and repayment terms. It also sets out the duties of borrower and the lender and in the event of default, the rights and remedies of each party.
The other common legal documents that you may need to sign are Deed of Assignments
, Charge documents
and Power of Attorney
Remember that throughout the tenure of the loan, your property is charged to the financial institution (i.e. the financial institution has a claim over your property).
Whether you are buying a completed property or a property under construction, you should obtain an explanation from the attending lawyer on the major clauses of the agreement and the implications of each clause.
- Documentation - A set of agreements, forms, and other documents to be signed in connection with a loan. The documentation will form a full set of records for the loan.
- Power of Attorney - A formal legal document giving authority to one person to act on behalf of another person.
Reprinted with permission from BankingInfo (A Consumer Education Programme by Bank Negara Malaysia)
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