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Also borrowing higher sum of amount, will lead to decreased cash flow and the monthly installment may grow higher than income. Further if the price of market shares, home or land that is given to bank as security deposit falls down during loan tenure, bank may even ask for some extra collateral and in case the borrower is unable to do so, bank declares him/her a defaulter and seizes the collateral. Another situation which is considered as default is when borrower does not pay the equated monthly installments (EMIs) in time. Altogether there are 15 such clauses that can make the borrower default, one and the most important is “depreciation in security”, and includes non payment, misrepresentation, breach of obligations, cross default, insolvency, insolvency proceedings, change of activity, validity of agreement, unlawfulness, expropriation and disposal, moratorium, IMF, material adverse change, project authority.
Sometimes lenders attitudes paves problems for the borrower, for this the borrower has to be attentive to ensure that he does not say or do things that may result in any sort of suspicion in lenders mind, otherwise he may be labeled defaulter or against the loan agreement and has to undergo disastrous circumstances.
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Home Loans
