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Formalities and complication for Loan Against Property
05-Dec-2023 (In Property Law)
i am an NRI and a joint second holder to a property.My mother is not an NRI and she is the first and majority holder of the property.. I have approached a bank for a loan against the property. I am applying for the loan and bank is giving me loan based on my financial credentials. However they insist that since i am NRI my mother be the co applicant and have POA. While they are saying that my mother is not financially liable for the loan in any way...i wish to be sure about this and want to know if co applicants for LAP as such are financially liable? What can i do to ensure my mother is not financially liable for the loan that i have taken
Dear Sir/Madam,
I believe there is some miscommunication on part of bank or they may not have explained you the right reasons for making her a co-applicant/borrower. Your mother is required to be a co-applicant/borrower since she is co-owner of the property. Unless and untill she doesn't sign the mortgage agreement, the bank won't have clear mortgage in their favour and they won't be able to exercise their rights in case you default in paying.
To clarify, the co-applicant is also a co-borrower and she'll be liable for repayment if you default. Hence, any proceedings initiated for recover of over dues or unpaid loan (in case of default) will be against both applicants/borrowers. However, such scenario shall not arise if you do not default in paying the loan.
I believe there is some miscommunication on part of bank or they may not have explained you the right reasons for making her a co-applicant/borrower. Your mother is required to be a co-applicant/borrower since she is co-owner of the property. Unless and untill she doesn't sign the mortgage agreement, the bank won't have clear mortgage in their favour and they won't be able to exercise their rights in case you default in paying.
To clarify, the co-applicant is also a co-borrower and she'll be liable for repayment if you default. Hence, any proceedings initiated for recover of over dues or unpaid loan (in case of default) will be against both applicants/borrowers. However, such scenario shall not arise if you do not default in paying the loan.
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Adv. Jairam Chandnani
Mumbai | 100+ Answers
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