Ways to Sell a Home with an Outstanding Home Loan

Being a homeowner is a prestigious thing but some time the owner has to sell off the property in which he/she has invested not only financially but emotionally also. But, property comes in relation with money so, if you are in doubt over selling–off a home with an outstanding home loan then here are the things to consider. Apart from the Seller, the home buyers are also required to check if the property you are interested in is debt-free or not.

Residential Property Outstanding Home Loan

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We have mentioned various cases that both the homebuyer and the seller faces while carrying out the property transaction deal for buying/selling a home with an outstanding home loan:

1. When the Buyer Wish to Pay From his/her Savings

In this case, there are three ways to pay the transactional amount. Firstly, if the buyer is willing to pay from his savings then the bank doesn’t come in the scene to complete the property buying/selling procedure as the monetary deal takes place between the home seller and the buyer directly.

In case the seller wishes to deposit money from his savings into the seller’s home loan account then the seller is required to request the bank for an outstanding home loan letter on the basis of which the buyer can deposit the property value directly into the Seller’s loan account. The bank relieves the seller from all liabilities soon after receiving the entire outstanding home loan amount and will return the property documents to him. Now the seller can transfer the property onto the name of the homebuyer at the earliest.

In case, the buyer still has some outstanding amount to pay even after depositing the amount in the seller’s home loan account then the buyer can deposit the remaining money into the seller’s saving account.

2. When the Buyer Avail Loan from the Seller’s Bank

The Tripartite agreement comes into action in this case. With both the borrowers seeking financial support from the same bank the time consumed for reviewing and sanction of a home loan becomes easier. The bank already knows the seller as he/she has an outstanding home loan. Thus, this financial institution is required to carry out an enquiry of the buyer only to check his/her financial condition. The bank looks after various details like information on ongoing loan, salary details and payback guarantee of the buyer. Also, the bank keeps a watchful eye on this case as the seller is required to clear the outstanding home loan amount.

The home buyer is required to deposit the remaining amount in the saving bank account of the seller if the property’s worth is more than what has been paid to the bank in relation with the seller’s outstanding home loan.

3. When the Buyer Avail Loan from a Different Lender

The bank other than that of the seller asks the home buyer to produce an outstanding home loan letter along with the checklist of the property documents that are with the seller’s bank. The buyer’s bank verifies the documents once they are received and then sanction the buyer’s loan application.

If the bank is satisfied with the documents then they will issue a cheque in favour of seller’s bank in reference to the outstanding loan amount and the application for a home loan will be rejected if the bank fails to be satisfied with the provided documents.

Soon after the cheque is cleared the seller’s bank will release the property paper and the property will be legally transferred onto the name of the buyer.

4. Essential Documents for Selling a Home with an Unpaid Home Loan Amount:

  • Mother Deed

  • Sale Deed

  • Documents Related to the Sanction of home loan

  • Housing society Share Certificate

  • Society NOC

  • Encumbrance Certificate

  • Property Tax Receipts