I have a home loan for a house that I want to sell. What’s the process?

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I have a home loan for my home that I want to sell to someone who also wants to take out a home loan. What procedure should be followed? Sushma

Answer: If you want to sell a property for which you have a current home loan, you will need your lender’s consent to do the same. This consent is usually given in the form of a letter, which usually specifies the amount at which the outstanding loan will be paid in full. This amount includes the prepayment fee, if any, charged by your bank, and will also include documents held by the lender that will be issued upon payment of the specified amount. The amount in the letter is usually calculated for a future date so that the buyer has time to raise funds. After paying all the fees, the bank will return the original documents to you and issue you with a loan closing letter, which will indicate that there is no payment in arrears. Make sure you get a no membership fee certificate to avoid future problems.

If the buyer is also looking for a mortgage to buy your property, it is advised to contact the same bank to make the process easier than it would otherwise. However, the buyer will have to go through a home loan for him.

In the event that a buyer takes a home loan from another lender, you can ask your banker to give you a commitment addressed to the buyer’s lender that they will hand over the documents to the buyer’s lender upon payment of the outstanding amount. In such a situation, the buyer’s lender will pay directly to your lender in exchange for real estate deeds. The buyer can pay the remaining amount upon receipt of the original documents from the bank. The process that all lenders follow can be different and may differ from lender to lender.

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

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