Most people assume that repaying or prepaying the home loan on their property is the most important aspect when it comes to loan repayment. But due to the extended tenure of the loan, say, 10-15 years, there is a possibility to forget the original property documents that you might have handed over to the bank when borrowing a loan.
Most financial institutions retain the original sale deed of the property from the borrower in order to extend their right over the property in case of a default, enabling the lending institution to have a lien or the right to retain the property belonging to the borrower until the loan is fully repaid.
If the bank has the lien then, selling or transferring the property to someone else will not be possible without the bank’s consent. But, in case of a default, any property that carries a lien can be forced into sale by the bank in order to recover the loan amount.
If the borrower wants to sell the property on the consent of the bank, the entire loan amount needs to be paid by the borrower so that the bank can clear the title deed, along with other original property documents and transfer it to the new property buyer. Thus, making the transaction much more hassle free.
If you want to buy the property whose lien is with the bank, you need to pay the entire loan amount before taking over the property, the amount of the loan to repaid can be adjusted with the total value of the property. If the new owner needs a loan to buy the property, then he/she needs to opt for availing from the same bank form where the earlier borrower had taken a loan.
Apart from the above information, it is highly important to make a note of the original documents that you have handed over to your bank for availing a home loan. Once you have managed to close your loan deal, you need to submit a lien release form. Once the form is submitted, the bank returns the property papers and you have complete rights over your property. Make sure the bank updates its records concerning your property.