With increasing property prices and increased convenience of Home Loan, its hard to buy any property without taking home loan. Home loans are typically long term loans anywhere between 5 years to 30 years. In such a long period you might want to sell your property which still has home loan outstanding on it.
Below are some questions which come to mind when you think of buying or selling a Mortgaged Property.
Well the answer to the first question is you definitely can buy or sell a mortgaged property, but the process is not as simple as in case of loan free property.
There can be two scenarios of selling a mortgaged home, depending on buyer preference:
Case 1: The buyer is ready to buy the mortgage home with home loan
Case 2: The buyer does not want home loan.
We take both cases one by one.
The following steps need to be followed:
In case the buyer agrees to take loan from the same lending institution as seller the processing money and time for the entire transaction is greatly reduced.
The following steps need to be followed:
In some cases where the buyer may not be ready to pay the complete sum in advance, the seller may need to arrange the gap in funds from other sources till he gets the full amount from the buyer.
Essentially here the seller has to close the loan before he gets his home documents, the funds for which can be taken from the buyer as token amount or a short term loan. This transaction is more risky for both seller and buyer.
The seller should always keep in mind about the tax implications due to a property transaction. A sale within three years would attract short-term capital gain (STCG) while that above three years would be liable for a long term capital gains tax (LTCG).
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I have a under construction property in Gurgaon and I have taken a home loan against it. Now due to some cash flow problems I need to sell it. This is an useful piece of information.
Good to know that the information helped you!