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I have a home loan on my house which I want to sell to a person who also wants to take a home loan. What is the procedure to be followed? Sushma

Answer: In case you want to sell the property on which you have a running home loan, you will need your lender’s consent for the same. This consent is typically provided in the form of a letter which will typically provide the amount, on payment of which the outstanding loan will be fully paid off. This amount includes the prepayment charge, if any, chargeable by your bank and would also list the documents held by the lender which will be released on payment of the stated amount. The amount mentioned in the letter is typically calculated as on a future date, to allow the buyer time to arrange the funds. After the payment of all dues, the bank will return your original documents and issues you a loan closure letter indicating that there is no outstanding amount to be paid. Please make sure you get the no dues certificate to obviate any issues in the future.

If the buyer is also looking for a home loan to buy your property it is advisable to approach the same bank so that the process is likely to be easier than otherwise. However, the buyer will have to go through the processing of home loan for him.

In case the buyer is taking home loan from other lender, you can request, your banker to give you an undertaking addressed to the lender of the buyer that they will hand over the documents to lender of the buyer on payment of the outstanding amount. In such a situation the buyer’s lender will make payment directly to your lender in exchange of the property documents. The buyer can make payment of the balance sum on receipt of the original documents from the bank. The process followed by all the lenders may not be uniform and may differ from lender to lender.

Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com

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