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Taking a loan for the purpose of buying a house is not an easy decision to take. It becomes more tricky when you have zeroed-in on a mortgaged property.

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Easy Ways to Buy or Sell a Mortgaged Property in India

Buying a property from the builder vs. buying a resale property:
These are the two options available to a home buyer in today’s market - buying a mortgage free property or a property with balance loan. There are advantages and disadvantages in both cases. Buying directly from the builder will ensure that you get a price advantage, while buying from a registered owner will ensure an easy loan disbursement as the property would have already been verified by the bank.
Added to this, the property would be complete in all respects and the locality would already have residents living. Most of the builders incorporate facilities like club house, outdoor courts, etc. which are included in the last phase of completion. These facilities take some time to become operational. Buying a house that is on mortgage or a repurchase will have the advantage of ready facilities. When you buy a property from the builder directly the price range can be compared easily and outgo on maintenance will be lesser.
Understanding about various types of mortgage scenarios will definitely help you decide and make the right choice.
Easy ways to buy mortgaged properties:
Let us discuss a few possible situations while buying or selling mortgaged properties:
Property in the name of seller and mortgage with bank A:
When a house has a mortgage on it, buying it means transfer of ownership along with the mortgage. It is a rather simple procedure especially if the buyer and seller have the mortgage from the same bank. This would mean that the mortgage will shift from one person to another. Let us assume that Mr Kumar wishes to purchase a house from Mr Anil. Let us further assume that Mr Anil has an outstanding mortgage of Rs. Twenty lakh against the property.
Mr Anil has taken the loan from say, Bank A. On purchasing the property from Mr Anil, Mr Kumar has to pay Mr Anil the amount that is due on the property and then apply for a loan from Bank A. Meanwhile, Mr Anil can use the down payment to repay the loan and Bank A will release the loan amount in the name of the seller, in this case Mr Anil.
Property in the name of the builder (or any other third party) and mortgage with Bank A:
There is another situation in case of mortgaged properties, where the seller might have taken a loan and purchased the property, but did not yet registered it in his favour. In this situation, a tripartite agreement is entered into between the buyer, seller and the owner (in whose name the property still remains). The seller gives a no objection certificate to the builder or the third party in whose name the property stands in the books of the registrar. The bank then releases the payment to the seller on the day of registration of the property in the name of the buyer. In this case the registration happens between the builder/owner and the buyer, though the loan amount is received by the seller.
Points to note while buying /selling properties in India:
Buying or selling property can sometimes prove tricky, especially if you are new to a city. There are different rules that govern purchase of properties of different types. Apartments have different rules than independent house. A plot or land will have a different procedure. It is therefore important to take a legal opinion before buying a property.
Here are a few tips for the property buyers and sellers:
  • Check the locality before you buy a property. It should have an easy accessibility to public transport system, shops and hospitals.
  • Check the credibility of the seller and ensure that the property title is clear.
  • Find out the reasons why the seller wants to sell the property. These days job change is a compelling reason for people to move out of a city and therefore decide to sell a property.
  • While selling a property it is advisable to check the background of the buyer.
  • Sellers have to ensure that they get the due sale proceeds on the day of registration of the property itself.
  • The importance of filing important documents and related papers in proper order cannot be adequately emphasised.
  • Last, but not the least take care of the tax returns and pay capital gains tax wherever applicable.

  • PSR Murthy:
    I am buying a flat which is under mortgage. We signed a Sale Agreement. The mode of payment is that we meet at the bank, I give to bank a DD for the sale consideration and the seller will give his DD for the remaining loan amount and the bank will issue an NOC to me which I use for Sale Deed registration. Now, in whose favour my DD should be made? Say, 'Seller loan a/c 123456789' or just 'Seller' or 'Bank, loan a/c123456789 of Seller'?
    11-May-2016 03:36 PM
  • Raj:
    I want to buy a 3 bhk or 2 bhk within 25 to 30 lakhs please help me out .
    07-Apr-2016 08:17 AM
  • D.K.Dasgupta:
    Dear Madam,

    I am thinking of purchasing a mortgage house (with bank) the seller is asking for 80% payment for releasing the mortgage papers. how can I safe guard my money. Kindly advice.
    13-Jan-2016 08:14 PM