Tips to buy/sell a property with an outstanding loan
One of the best ways to generate extra income is to invest in property in India. Most of us buy more than one home and rent it to make extra income for the family. More often than not, investing in a property is not possible without seeking a loan. Property investors seek loan for their properties which are under construction. It is not an easy process for the property investor to take possession of his home. He gets the possession of it only when the entire project is complete.
What is an outstanding loan?
An outstanding loan is the portion of the loan which is yet to be paid. As the payments are applied to the loan balance, the amount of the outstanding loan decreases. The lower the interest rate, the faster the balance declines when payments are made. Few of its main characteristics are; accured interest, tracking delinquency, calculate loans outstanding, consumer loan and pay off balance.
In many cases, the property owner finds it difficult to repay the loan back as the interest is quite high. He can pay the EMIs easily but will find it difficult to pay the entire amount back. In many cases the loan repayment becomes quite a big hassle and people sell their properties in order to pay their loans. Also if a person has rented two homes, he pays the profit of one home to repay the loan for the other home.
One of the main problems in property investment is the financial insecurity. This insecurity makes the person want to sell his house on which he still pays the EMI. Also most property investors like to rent out their home and relocate to another place with better amenities and needs.
It is always advisable that the property investor has to invest in a mortgaged resale property rather than investing in an under construction property. By purchasing a resale property, the investor can enjoy the benefits of a better established location and he will be dealing with a particular individual instead of a team.
It often happens that a buyer is forced in to buying an under construction property through the salespersons tactics which gives the buyer a very less time to conduct due diligence. But in case of a resale property the buyer gets ample amount of time to examine the pros and cons of the property. Also when a buyer opts for a resale property he/she gets all the necessary approvals from the relevant authorities.
How to settle the outstanding loan of a property?
If you have a property with an outstanding loan of about 5%, you can ask the seller to pay a part of the outstanding loan amount from your property investment. Also get all the original documents from the bank. Ensure that you have a pre-approved loan and get the property registered in your name. Once you get the registration in your name you can pay the remaining amount. In most cases, the sellers of the property are in a hurry as they will seldom find any buyers and they give the property away to the one who comes their way. This will benefit the buyer. There can be various reasons for property buying and selling with an outstanding loan, the major problem among people is that they are quite ignorant about the clarity on how to buy or sell a property that is mortgaged to the bank. Questions like Can you sell a mortgaged property at all? Do you need to settle the home loan first and then approach a buyer or can the buyer take over your loan? What if the buyer himself plans to take a loan to fund the purchase? Arise among them.
Property documents:
It is very important that the buyer and the seller should get all the legal papers before exchanging them. This can help in an easy settlement of the outstanding loan. Few of the main documents required to sell a residential property are the housing society share certificate and the sale/ purchase deed of the property. These documents confirm the ownership of the seller and his right to dispose it. Also in case the property has been transferred to many other people, the buyer can demand for the previous deeds.
For more information about the outstanding loan, you can follow the link;
http://m.economictimes.com/PDAET/articleshow/msid-13968894,curpg-2.cms
