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How To Sell Home Before Home Loan Repayments Are Complete?
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Financial planning sometimes calls for reselling of the house one purchased by availing a home loan. A few years after buying the house, the buyer may wish to sell the house for a number of reasons. One may want to change the location of the house or may want to buy a bigger house. A number of questions arise when a buyer turns into a seller while being a borrower. Can one buy or sell mortgaged property? When should the buyer be approached? Should the home loan be settled first? So on and so forth. Let us take you through the answers.
Can one buy or sell mortgaged property?
Yes, one can buy or sell mortgaged property. In fact mortgaged property is a safe option to sell as the buyer can rest assured of all the relevant documents being verified and approved by the concerned authorities.
When should the buyer be approached?
One must get the housing society share certificate and the sale/purchase deed of the property in place prior to approaching any buyer regarding the resale of property. One must ensure the same before visiting the housing finance company as well. Arrange all other documents like photocopied stamp duty papers and registered house documents. Keep all no objection certificates in place so that the buyer builds trust in you while the dealing takes place. Show the buyer proof records of the originals.
Should the home loan be settled first?
Yes, the home loan amount should be settled before the seller sells the house to the new buyer. Home loan balance transfer is not permitted in India. Thus one must understand the means of home loan payment by the buyer:
• If the buyer is purchasing the property with his own savings then the procedure is simple. The buyer needs to obtain a letter from the housing finance company stating that they agree to relinquish the housing documents once the due payment has been made. The buyer is then required to deposit the outstanding home loan amount to the seller’s home loan account. This process shall then initiate the releasing of the property documents by the lender.
• If the buyer is purchasing the property by planning a housing loan, the seller must settle his housing loan amount first. Home loans in India are not transferable. The procedure of availing the new loan can only be initiated once the previous loan amount is fully paid. The buyer may approach the same lender for faster approval of the housing loan as the original documents of the house remains with them.
Reselling a house having taken a house loan for it may seem cumbersome but it is simple and safe. Keep your papers ready before you approach a buyer and you are likely to crack the deal. Ensure you have taken into consideration the tax implications. Negotiate with the housing finance company to wave off the pre-payment charges. Close the deal once the paper work is in place and the originals are handed over with due diligence.
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