3 Tips to Buy a Mortgaged Property in India
March 07, 2022
Purchasing a mortgaged property can come with a host of benefits. However, because it is a resale property with an existing loan, certain things should be kept in mind. Read this post for 3 tips that can help you with the purchase of a mortgaged property.
Any property with an existing Home Loan is considered a mortgaged property. Compared to purchasing an under-construction property or being the first owner of a fully-constructed property, a mortgaged property comes with many benefits.
As the property already has an outstanding loan, it is safe to consider that a lender has already completed the necessary verification for the property. However, as you’d be purchasing a mortgaged property with an existing loan, keep a few things in mind. Here are 3 tips that can help -
1. Prefer Taking your Home Loan from the Same Bank
If you’d like to avail a Home Loan to purchase a mortgaged property, it might make sense to consider taking a loan from the seller’s loan provider. As the lender has already completed due diligence while sanctioning the loan to the current property owner/seller, the loan approval would be faster.
Moreover, the lender will already have all the required documents related to the property. You will be required to submit identity and income-related documents alone, to get your loan approved. But, if you are getting a cheaper Home Loan from another lender, it makes more sense to consider the new lender.
2. Verify the Property Documents
Document verification is critical when purchasing a property with an outstanding Home Loan. Here are the documents you should ask from the seller -
Copy of a sales deed to make sure that the seller is the legal owner of the property
Property tax documents to ensure that there are no pending taxes on the property
Copy of stamp duty to assess the registration charges for purchasing the property
Electricity and water bill to ensure that there are no pending dues.
Buyers are advised to consider professional legal help for document verification, to avoid any discrepancies in the future.
3. Ask for a Loan Outstanding Statement from the Seller
Irrespective of whether the property is being purchased with a new Home Loan or if the buyer is purchasing it using his or her own funds, it is essential to ask for a Loan Outstanding Statement from the seller. The statement will have a detailed information about the loan amount repaid by the seller, the outstanding balance, and penalty interest, if any.
The buyer should also request the seller to obtain the property document confirmation letter from their lender. This will include a list of original property documents they have received from the seller, against the Home Loan.
Should You Purchase a Mortgaged Property?
If you’ve found a mortgaged property that fits your budget and requirements, you should definitely consider purchasing it. While the process can be slightly more challenging than buying a new property, you can experience a host of valuable benefits.
Keep the points mentioned above in mind if you'd like to purchase a mortgaged property, and consider legal help to avoid mistakes.