Buying a property can be a tedious affair and getting a good deal for a preferred property is challenging. Instead of new projects, often mortgaged properties are attractive for potential buyers. However, a mortgaged property involves a buying procedure different from that of a regular re-sale or new project property. If you are interested in opting for a mortgaged property that is suited to your needs but don’t know how to go about it, read to know its benefits and the procedures involved.

Benefits of Selecting A Mortgaged Property

No doubt the paperwork will be on the higher side when it comes to a mortgaged property buying. However, it also comes with its own set of advantages:

# Mortgaged properties are mostly sold at a discount to new ones. This is because they would have been occupied for some time and might have some wear and tear. So, if you buy a mortgaged property, you are getting a ready-to-occupy property at a lower cost.

# Very often, mortgaged properties that come up for sale are not very old, mostly under 10 years. The owner may have decided to sell it because of capital appreciation in the particular area and may give you a good deal compared to other expensive properties in the same vicinity.

# Home Loan evaluation for such a property will be easier as there will already be a record of the value of the same and the previous owner would have gone through all the approvals already. If you take a loan with the same lender that granted the loan, you can save a lot of time that would otherwise have to be spent on document verification and evaluation of the property.

Documents Needed

The documents needed for buying a mortgaged property vary slightly depending on whether the buyer is using his/her own funds or availing a home loan for the same.

Sale Deed: This is the most important document. The original will of course be with the bank, but get the photocopy from the seller to establish whether he/she is the rightful owner of the said property and confirm the same with the bank as well.

Tax Receipts: You will need to obtain latest tax receipts related to the property whether corporation, water or any other as per the state government’s rules. Since the property may not be in use, some taxes may be pending too. So make sure to deduct the amount owed from what you decide to pay the seller.

Stamp Duty: Get copies of the stamp duty paid to the government to assess how much you would have to pay when your registration of the property takes place.

Letter from Bank: The seller will need to obtain a letter from the bank where his property is mortgaged, wherein the bank states that they agree to relinquish the original property documents after the full and final payment has been made on the outstanding home loan.

For those wanting to purchase the new property with a home loan, the seller will have to first pay off the home loan. It is not possible to simply transfer the loan from the seller to the buyer. For this, you need to first go through the process of getting a Home Loan for the property. You can initiate the closure of the seller’s loan only after your loan has been approved. In case you are taking a loan from the same lender, the old loan account can be closed using your loan and the lender will pay the rest of the amount to the seller. The bank will release the original papers once your loan is approved and the old loan is closed

PAN Card: This is a must as your tax implications will have to be recorded.

Miscellaneous Documents: Any other document that may be required by the state and the local government at the property location or you to buy the property. Some governments and local bodies may ask for domicile certificate or likewise documents for you to be eligible to buy the property.

Apart from these, do remember that mortgaged property buying involves different rules depending on the purchase of different kinds of properties. Apartments entail different rules as opposed to independent houses, while the rules governing the sale of a plot of land involves different buying legalities and procedures. Hence, it is always better to take legal guidance before proceeding to purchase a mortgaged property.

(The author is CEO, BankBazaar.com)