Purchasing a property is tedious, and getting a good deal for it can be challenging. Instead of newly built, buying mortgaged properties often has several benefits for potential buyers. However, the buying process for a mortgaged property differs from that for a new or a resale property.
If you are planning to buy a mortgaged property by taking a mortgage loan but don’t know how to go about it, this article can help you.
Mortgaged property and its benefits
Any property with an outstanding home loan is called a mortgaged property. This means the property is pledged to a bank until the loan amount gets paid. When you purchase the mortgaged property, you will need to take over and pay off the loan. A mortgaged property comes with several benefits compared to purchasing an under-construction or fully-constructed property.
- Secondhand properties are usually affordable as they are usually 10 to 20 years old. However, since the owner might be looking to leverage the increasing property prices, you can negotiate and get a good price for the property.
- Additionally, these properties are sold at a lower price than new properties, even if they are in the same neighbourhood. By buying a mortgaged property, you can own your dream home at a much lower cost.
- One of the biggest benefits of purchasing a mortgaged property is that you can avail of a home mortgage loan from the same bank where the property is mortgaged. The loan approval process will be simple and quick as the bank has already checked and evaluated the documents and completed the necessary verifications such as signatures. You can get the benefits of electronic signature software to sign your mortgage loan documents because it is legal in Banks under ESIGN act.
3 tips for buying a mortgaged property with the help of a mortgage loan
If you decide to buy a mortgaged property through a home loan, you must keep the following things in mind:
Take the loan from the same bank where the property is mortgaged
If you are looking for a home loan to buy a mortgaged property, it will be wise to take the loan from the seller’s bank. Since the bank has already finished the formalities required for sanctioning the loan to the current property owner, loan approval will be faster. Also, the lender will have all the essential documents related to the property, and you will need to submit only identity and income proof documents to obtain the loan approval. But if you think you can get a home loan with lower mortgage loan rates with another bank, you may consider that lender.
Verify all the documents
Document verification is imperative if you are purchasing a mortgaged property. The documents you must procure from the seller are:
- Copy of the sales deed to ensure that the seller is the legal property owner.
- Tax documents of the property to ensure that there are no pending taxes on it.
- Copy of the stamp duty to understand the registration charges for buying the property.
- Utility bills to ensure that there are no pending dues to be paid.
It is advisable to seek the advice of a legal professional for document verification to avoid any future disagreements.
- Request an outstanding loan statement from the seller
Whether the property is purchased with a home loan or the buyer’s finances, you must ask for the Outstanding Loan Statement from the seller. This statement has all the information about the amount of loan the seller has repaid, mortgage loan rates, outstanding balance, and penalties if any. You should also request the seller to procure the property document confirmation proof from their bank. These will comprise the original documents they got from the seller for the mortgage loan.
If you find a property that aligns with your requirements and budget, you must consider buying it even if it is mortgaged. Even though the process may be a bit more complex than buying a brand-new property, the benefits of purchasing a mortgaged property are plenty. Keep the above pointers in mind before finalising the purchase of the mortgaged property, and avail yourself of legal help whenever necessary.