Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

I want to apply for a home loan, but the property is registered in my father's name. Is it possible? Can anybody help clarify my understanding of home loans?

share|improve this question
    
In general, a housing loan or mortgage is secured by the property; in case of non-repayment, the lender is entitled to foreclose on the property (take possession) and (usually) sell the property to recover the principal amount of the debt. If the sale price is more than what is owed, the balance is returned to the person who owned the property. So, when you apply for a loan, how will you give the bank authority to sell property not belonging to you in case you fail to repay the loan? –  Dilip Sarwate May 22 '12 at 11:25
1  
1) Why can't the property be used as collateral with Dad as a co-signer? 2) Why doesn't the loan include buying the property from dad? Me and fiance plan on building on her mom's property (which will be split between her and her brother). When we do it, "our half" will be put in our name so that the land AND house is in our name. –  WernerCD May 22 '12 at 15:23

2 Answers 2

If the property is registered in your dad's name, you cannot get a home loan on your name. Look at it from a lender's point of view, you take the loan and vanish, they cannot take possession of the property as it’s not on your name. Legally your dad is not party to a transaction between you and Bank.

If your intent is to get some funds for the property then; Options: Let your dad take a loan and you can co-sign [although most Bank’s if you are co-signing need your name on the property]. This may allow your dad to take a loan if his own income does not allow him to do so.

Take a personal loan for smaller amount, though the rate of interest would be high and the tenure (duration of the loan) shorter.

If your intent is not for funding the property but to get tax breaks; then the above will not help you. You would need to have the property in your name.

share|improve this answer

A housing loan or mortgage is generally obtained to buy a property, and it is secured by the property being purchased.

  • Assuming that you are buying the property in question from your father and it does not have any mortgage or housing loan on it at present, the bank will pay the amount that it is loaning you (agreed-upon purchase price minus whatever down payment you are making to your father) to your father, who will transfer the title to the property to your name. Thus, the property will be titled in your name, not your father's, when the purchase is completed and the bank will be entitled to foreclose on the property and sell it if you fail to make the necessary payments.

  • Assuming that you are taking out a housing loan to buy some other property, the fact that your father owns some property has nothing to do with the matter. The bank will pay whomsoever owns the property that you are purchasing, the property will be titled in your name when the purchase is completed and the bank will be entitled to foreclose on the property and sell it if you fail to make the necessary payments. If the seller has a mortgage or housing loan on the property, your bank will make sure that the seller's bank is paid off first, and the seller will get only whatever is left after the seller's bank is paid off. Other monies that generally change hands under the table when a real estate transaction occurs in India are your responsibility.

  • If you need the proceeds of a loan for other purposes, e.g. for current living expenses, and want to get a loan in which your father's property is the collateral, then, as Dheer has pointed out to you already, that is not possible. Your father could take out a housing loan on the property that he owns, but it would have to be paid back by him, and the loan application might be denied by the bank if his income is small. In the US, reverse mortgages are becoming popular where a homeowner effectively agrees to sell the property to the bank which makes monthly payments to the owner (instead of the owner making payments to the bank). When the owner passes away, the bank owns the property. This provides a steady income stream to those whose income from pensions etc is no longer adequate to cover living expenses. But again, this is something that the owner of the property can do, and the payments go to the owner, not his children.

share|improve this answer

protected by Chris W. Rea Oct 17 '12 at 12:35

Thank you for your interest in this question. Because it has attracted low-quality answers, posting an answer now requires 10 reputation on this site.

Would you like to answer one of these unanswered questions instead?

Not the answer you're looking for? Browse other questions tagged or ask your own question.