Can I Sell My Property with a Loan Outstanding Against it?
Yes, you can, but you will need the bank’s consent. This consent letter will typically provide the amount, on payment of which the outstanding loan will be fully paid off.
This amount includes the prepayment charge, if any, chargeable by your bank and should list the documents held by them that will be released on payment of the stated amount. This amount mentioned in the certificate is typically calculated as on a future date, to enable time for the buyer to arrange the payment.
Based on this certificate, you can negotiate the sale of your house with potential purchasers. If the new purchaser takes the loan from your existing bank, the process is far simpler than if he were to take the loan from another bank, which may need the title deeds in its hands before it agrees to release payment.
In the event the purchaser is not taking any loan and is making an outright payment, the new purchaser can make a cheque favouring the bank for an amount equivalent to the amount stated in the certificate. This will clear your home loan. For the balance amount, he will provide a cheque in your name. Your property documents will be released to the buyer only when you have prepaid your entire housing loan.