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Home Loan

Can I Clear the Seller’s Home Loan Directly When Buying a Resale Flat?

If you are buying a resale flat where the seller has an existing home loan, you have several options to proceed with the transaction. Let’s explore these options and understand the safest way to handle this situation


OPTIONS FOR HANDLING THE SELLER’S EXISTING HOME LOAN:

Option 1: Loan Transfer within the same bank:

The process is relatively simple if you are taking a home loan from the same bank where the seller has their loan. The bank will transfer the loan balance from the seller’s account to your account without releasing the property documents.

Option 2: Loan Transfer to Another bank:

The process of taking a home loan from a different bank involves,

  • The seller collects the List of Documents (LOD) from their bank
  • Handing over the LOD to your bank
  • Your bank issuing a cheque to the seller’s bank to settle the loan
  • Collecting the property documents from the seller’s bank

Option 3: Self-Finance (without a Home Loan)

If you are buying the property with your own funds, you can directly help the seller clear their loan by making a payment to the seller’s bank. Once the loan is cleared, the seller can collect the property documents.

However, this option carries some risks:

  • The bank will not release the property documents directly to you
  • The seller may delay handing over the documents until the Sale Deed is Registered, which can be stressful

CASE STUDY: LOAN TRANSFER FROM ONE BANK TO ANOTHER

Here is a real-life scenario we encountered recently:

  • Property Details: The resale flat’s price was Rs. 60 Lakhs, and the seller has a loan outstanding of Rs. 22,25,408 from IDFC First Bank
  • Buyer’s Loan: The buyer took a loan from SBI

Procedure Followed:

  • The Buyer paid a token amount of Rs. 10,000 to the seller and signed the Sale Agreement
  • The Seller collected the LOD from IDFC First Bank and handed it over to SBI
  • SBI approved the buyer’s loan of Rs. 50 lakhs based on the LOD, Sale Agreement and income proof
  • SBI disbursed the loan amount in two cheques:
    • Cheque 1: Equivalent to the seller’s loan outstanding amount, addressed to IDFC First Bank
    • Cheque 2: Final settlement amount, addressed to the seller’s name

The seller and SBI representative visited IDFC First Bank to hand over the cheque 1 and collect the title documents

(Note: The cheque for loan clearance is addressed to the seller’s bank. Refer to below image)

  • The buyer and seller registered the Sale Deed
  • Seller and Bank registered the Memorandum of Deposit of Title Deed (MODT)
  • SBI released the cheque 2 to the seller as the final settlement

KEY TAKEAWAYS:

If self-Financing:

  • Write a cheque directly to seller’s bank for loan clearance
  • Be cautious, as the seller will collect the property documents and may not hand them over until after Sale Deed Registration

If Taking a Home Loan:

  • This is the safest option
  • The bank manages the financial transactions and secures the property documents on your behalf

Pro Tip: Even if you can self-finance, consider taking a small home loan to ensure a secure transaction.


For consultation, please write to us pgnproperties@gmail.com or WhatsApp to +91-97424-79020

Thank you for reading…

Categories
Home Loan

How to check mortgage on property in India online?

To check the mortgage on property, Check the ENCUMBRANCE CERTIFICATE (EC). Loan details are reflected in the Encumbrance certificate of the property

For example: I have taken a home loan from Corporation Bank and encircled the bank details in my encumbrance certificate (EC) below.

 

NOTE:

  • Loan details are reflected in EC if the MODT is registered in registrar’s office.
  • Some banks and private lenders don’t register the MODT and they collect the title document from borrower, title document includes Registered Deed.

To check the loan on the property:

  • 1st check the EC
  • 2nd ask the property owner to show the original Registered Deed.

In Karnataka, extract the encumbrance certificate online on Kaveri Online Service https://kaveri.karnataka.gov.in/landing-page


In Karnataka, we provide assistance to extract FORM 15 EC for property verification. To opt for our service, please write to us pgnproperties@gmail.com or Whatsapp to + 9 1 – 97424 79020.

Thank you for reading…

Categories
Home Loan

How do I find out if a property is on a loan or not?

Check the ENCUMBRANCE CERTIFICATE (EC)

Loan details reflect in Encumbrance certificate of the property

For example:  I have taken home loan from Corporation Bank, I have encircled the bank details in my below encumbrance certificate (EC).

NOTE:

  • Loan details reflect in EC only if the MODT registered in registrar office.
  • Some banks and private lenders don’t register the MODT and they just collect the title document from borrower, title document includes Registered Deed.

In order to check the loan on the property:

  • 1st check the EC
  • 2nd ask the property owner to show the original Registered Deed.

In Karnataka, we provide assistance to extract FORM 15 EC for property verification. To opt for our service, please write to us pgnproperties@gmail.com or Whatsapp to + 9 1 – 9 7 4 2 4 7 9 0 2 0.

Thank you for reading…

Categories
Home Loan

How do you find out if there is a loan on a property

When buying or dealing with a property, it’s crucial to verify whether there’s an existing loan or mortgage on it. A property with an outstanding loan can lead to legal complications, so conducting due diligence is essential. In this blog, we’ll guide you through the steps to check if a property has an active loan and how to ensure a smooth transaction.


Check the ENCUMBRANCE CERTIFICATE (EC). Loan details reflect in the Encumbrance certificate of the property

For example: I have taken a home loan from Corporation Bank, I have encircled the bank details in my below encumbrance certificate (EC).

EC

NOTE:

  • Loan details are reflected in EC only if the MODT is registered in registrar’s office.
  • Some banks and private lenders don’t register the MODT and they collect the title document from borrower, title document includes Registered Deed.

To check the loan on the property:

  • 1st check the EC
  • 2nd ask the property owner to show the Registered Deed.

Need Professional Assistance?

At PGN Property Management, we specialize in property verification, due diligence, and legal documentation. Whether you’re buying, selling, or investing in property, our team can help you ensure a smooth and hassle-free process.

Contact Us:

Email: pgnproperties@gmail.com

WhatsApp: +91-97424 79020

Categories
Home Loan

I am selling my house to a buyer taking a home loan. The buyer says I must register the house in his name and hand over all documents to the bank, and I will receive the payment after 2 days. Should I trust this process?

If a buyer is purchasing a property using home loan, the bank representative handover the full and final settlement on registering property in sub-registrar office. Bank representative hand over the final settlement in mode of DD or cheque in sub-registrar office.

You don’t have to wait for 2 days to receive the payment from bank.

Below are the systematic steps to be followed if buyer is opting for home loan.

Step 1: Seller and buyer sign the sale agreement.

At the time of sale agreement signing, seller receives advance payment in the mode of cheque, DD or online account transfer from buyer. The advance payment could be up to 20% of selling price

Step 2: Parties sign the Sale Agreement and buyer apply for home loan

Step 3: Bank approves the loan in around 30 working days. The bank writes the final settlement cheque. The bank’s representative informs buyer that cheque is ready.

Buyer informs seller that final settlement cheque from bank is ready. Seller may visit bank to cross-verify final settlement cheque or ask the bank representative to share the cheque image through email.

Step 4: Seller gives the date for sale deed registration to buyer.

Step 5: Buyer prepares the sale deed draft and share the sale deed draft with seller for cross-verification.

(Generally, the sale deed draft is in word format so draft can be exchanged through email or a messaging app)

In the draft, make sure that bank’s cheque number is mentioned.

Draft should be mutually approved between buyer, seller, bank, and advocate before proceeding with sale deed registration.

Step 6: On the day of registration,

Seller carries the following documents to sub-registrar office

  • Sale deed
  • Encumbrance certificate
  • Latest tax paid receipt
  • Khata certificate and extract
  • PAN
  • Aadhar

Buyer carries the following document to sub-registrar office:

  • Challan (Stamp duty, registration charge and cess)
  • Aadhar
  • PAN

Bank representative carries following documents

  • Final settlement cheque
  • Checklist for original document collection

Step 7: Seller and buyer register the sale deed in sub-registrar office

Step 8: Immediately after the sale deed registration in sub-registrar office, bank representative hands the final settlement cheque to seller.

The seller hands over all the original documents to bank representative

Step 9: Buyer do “Memorandum of Deposit of Title Deed” (MOTD) with bank representative.

NOTE:

  • As a seller, you don’t have to wait for 2 days to receive payment. The payment, original documents and property keys are exchanged immediately after the deed registration in sub-registrar office itself.
  • As a seller, your role completes once you receive payment, handed over the original document and property key to buyer.
  • It’s buyer’s responsibility to deal with his bank for release of loan amount and submission of original documents.

We provide end-to-end seller assistance. To opt for our service, please write to us pgnproperties@gmail.com or Whatsapp to + 91 97424 79020

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