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?
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.
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.
Is it possible?
No. It is not possible.
Can anybody help clarify my understanding of home loans?
A home loan works like other secured debt. Secured meaning that real property is named in the loan contract as collateral against the debt balance. This simply means that if you don't/won't/can't pay the money back, the lender has a legal right to take possession of the property. This would be called a foreclosure in the case of a home loan. With an auto loan, for example, it would be a repossession of the car.
Obviously, I don't have legal grounds to take out a loan and name your car as collateral. Similarly, you and your father are two separate entities, so you have no more legal grounds to do that with his home.
If you are living in a home that is not in your name, realize that you are a renter. Even if you are paying the mortgage and maintenance, legally you have no rights to the property.
I suggest clarifying the situation with your father. If his intent is for you to posses the property, you both need to discuss how to get the house into your name. Seek legal and tax counsel if that is the case. Otherwise, the property is his to do with as he wishes.
protected by Chris W. Rea Oct 17 '12 at 12:35
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