Loan on property
virender singh
(Querist) 24 October 2011
This query is : Resolved
i have some property in my native worth rs 30/35 lacs aprox . i want to start some small business and need 5/7 lacs. if i apply for loan on property from bank for said amount then in case of failure to repay the loan to bank ,will my whole property be acquired by bank for payment of 5/7 lacs or only part of property worth5/7 lacs be acquired by bank and remaining part of property be owned by me.Pl.advise
Sankaranarayanan
(Expert) 24 October 2011
yes you are liable only for the amount what you kept arrier or balance to banker with penalty for default and interest arrier,
Devajyoti Barman
(Expert) 24 October 2011
It depends upon the arrears due to the bank.
To recover the actual arrears amount the bank may ask for sale of the mortgaged property and out of it it would repay the amount due to it and balance would be returned to it.
So practically speaking the whole property may be at stake towards recovering the amount due to the bank.
ajay sethi
(Expert) 24 October 2011
dont take loan against property. your whole property will be mortgaged to bank and on your failure to repay loan bank will adopt recovery proceedings . interest rate on loan againat property is more than on a housing loan .
bank can auction property . sold at reserve price which is generally lower than market rate . after bank dues balance if any is credited to your account
prabhakar singh
(Expert) 24 October 2011
Mr. Sethi advice is quite practical.A neat reply to your query is that for a loan of 5to 7 lakh ,it is not advisable to fasten a liquidity of asset worth 30 to 40 lakh a quite 5 to 8 times of loan would be locked for ever unless loan is retired and in case you fail the bank shall proceed the then outstanding towards loan and interest against the whole against a reserve price always lessor than market,the surplus if any may be returned to you but in each and every circumstance if you fail in business ,in all probability you will loose this property too.
Apart from law if you commercially look upon the scenario then you have property worth 5 to 7 times of your need of capital,then it would be prudent to sale 1/5 to create capital,if you succeed in business you can regain the property worth capital.In case you loose in business even then your 4/5 th of the property shall cover your losses by price appreciation,and in case of need you can further pump in capital in business.So it would always be a win win situation if you act on my this advise.
M V Gupta
(Expert) 25 October 2011
Do not mortgage your 30 lakhs worth property for a loan of only 6 to 7 lakhs. Try to provide two sureties to guarantee the loan. You may also try to get advantage of special schemes available with the Banks for providing credit facilities to small traders and businessmen. Discuss with your Bank for details. Under these schemes the bank may grant the loan on your personal bond also.
