Possible issues in a Home Loan

A Home loan is a long term legal contract between a bank and the customer, so knowing the legal terms and conditions included in the process is better for those who are planning a house in coming future.

While going through the process of a home loan a customer might face different type of legal issues. So avoid all those issues and to have a hassle free home loan experience, please follow the below tips and please be aware of the legal factors included in your home loan application.

1.    Home loans process starts with the documentation in which the documents which you submit will have a great value in completing the case, so please do not submit any fake documents and don’t try to misguide the bank to avail the loan as the banks have the right to take legal action against those persons who tried to misguide the bank. Details which you mention in the application form should not have any discrepancy, banks will verify the details mentioned in the application and if the bank notices any discrepancy then it can reject the application form with out any prior notice.

2.    Please keep all your receipts of the amount paid towards the credit cards which you settled previously because bank may ask for the receipts of the payments once the details are found in CIBIL.

3.    When the customer submits the property documents banks will verify the property details given by you and the documents will be scrutinized by the advocates and search report will be obtained from the concerned sub-registrar office for the details of deeds and the vendors. If there is any discrepancy in the documents banks will ask the customer or vendor for clarification or for other supporting documents.

4.    Property will be evaluated by the technical valuers and if any deviations observed in the property then customer need to submit additional documents.

5.    Once all process is completed the vendor need to verify all his original documents with the bank official before disbursement of the loan and the customer need to submit latest EC recording all transactions of the property in original.

6.    Customer need to sign all the legal documents and the Home Loan agreements in regard of the disbursement of the loan and the property will be hypothecated to the bank till the loan is repaid back in full after the registration. Customers are suggested to read the agreement copy before signing it.

7.     If the customer gets defaulted in repaying the loan bank can appoint agents to collect the EMI’s from the customers and the customers will have to co-operate with them.

8.    If the customer fails to pay the EMI’s then the bank will cease the property to cover the loan amount taken by the customers, and once this happens the customer will be added into the defaulters list of the CIBIL (Credit Information Bureau of India Ltd).

Every customer is suggested to take as much less amount as possible from the bank to save the interest paid on the loan to be punctual in repaying the loans to keep your credit history good.

8 thoughts on “Possible issues in a Home Loan

  1. How many months on non payment of EMI will attract legal action. what are the steps bank may take. How can a customer protect his property even after becoming default.

    1. Banks will look to a maximum period of Non Payment above which the case will be treated as NPA i.e “Non Performing Assest” and legal action will be intiated on the customer. If any guarantr is present in your application while taking the property then he will be made liable to make the EMI payment if none then immediately legal action will be taken on the customer.

      There is no way out to save your property after becomg NPA bank will hold complete rights to acquire your property and to auction it to clear their dues as per the SARFAESI Act 2002. Banks Home loan facility agreements will have a GPA copy in which it states all these conditions related to acquirng the property of the customer when he becomes default.

      1. I have a home loan from IDBI bank for the apartment/flat I purchased. Now my EMI dues are accumulated to the extent of 7 lakhs. I had taken this loan during the end of 2005 wherein I paid up the EMIs regularly till 2009. After that I haven’t paid up much. Now my dues are of 27months. I had told the bank 1 year ago that I’m planning to sell the flat and shall go for the closure of the loan. I found the buyer also, but unfortunately he has gone abroad on work and was suppose to come by March beginning and do the sale proceedings. So accordingly I’d given the bank a PDC of the closure amount dated March 15th 2012. But now he will be coming only by April end 2012. I requested the bank to give me an extension of one month which they are strictly refusing saying that they are constrained to take further necessary legal/recovery actions.
        I’ve tenant staying at my flat for lease.
        Please advice me with a solution that how I can get an extension of 30days or so and save my flat?

        1. Banks will start taking legal actions on customers if they fail to pay the EMI’s for continuous 6 months but where in your case you have an over due of 27 months EMI’s. So in this case it is not possible from the banks side also, to give more time to you. If you want to hold the bank for some time to close the deal of your flat sale then make some payment towards the EMI with which you cn buy some time to close the loan.

  2. I wish to purchase a flat.The person who booked the flat didn’t recived the title deed yet as the apartment is not yet completed. he wish to sell it to me. I want to know if the builder give an NOC then is it possible the bank will pay the amount to the person other than builder

    1. If the property registered in the name of the seller i.e the person who is selling the property then the bank will give the loan amount to the seller only otherwise the loan will be directly disbursed in the name of the builder and you need get all the Agreements from the builder only. The seller will not be in the picture as he hasn’t got any registered documents on his name.

  3. my sister husband is not paying emi since 12 months they are in verge of divorce she is co applicant of the housing loan
    she has mentioned to the bank that she is ready to surrender her rights and bank should do the legal action and auction the flat but her husband is not reponding what should she do as bank is also not helping her pl reply.

    can i know what is the liablity and rights of co applicant

    1. Contact collection department of the bank and explain the issue, meanwhile your sister need to release all his ownership right of the property to be free from liability. Banks will take over the property if there continuous defaults in paying EMI and auction it.

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