It is important to do thorough legal due diligence before purchasing a property. If you are buying a property that is mortgaged, it is important to check the physical and legal status of the property. Keep 4 things in mind while buying property…

1. Physical Inspection: Physical inspection of the property reveals its condition, need for maintenance and repairs. You will be able to ascertain whether the property suits your needs or not.

2. Legal Intricacies: Understand the legal intricacies of property. This will require examining the property title, outstanding loans, mortgage and other documents.

3. Know the outstanding loans: Before buying a resale property, find out the outstanding loans of the seller. While this may seem like a complicated process, it is necessary because you do not pay the seller’s debt directly. Instead, they contribute to it indirectly.

Example: If the outstanding loan against property is Rs 50 lakh and you repay it for Rs 95 lakh. If you are buying in Rs., the seller will use a part of your payment towards settlement of the loan. After this the bank holding the mortgage on the property will release the first mortgage on the property. seller’s Once you repay the loan in full, you will get clear title of the property. This will ensure that the property is free from any legal encumbrances.

4. Many things play an important role during loan transfer.

Many factors play an important role while approving loan transfer. This includes age, income, CIBIL score, credit history, stable source of income, work experience, documentation, collateral/guarantee etc. If you are taking a loan to buy a property, your bank will require clear title and first mortgage on the property. This will be fulfilled with the receipt of release deed from the bank. This will be enough to convince your bank that the property is sufficient as collateral for the loan.


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