When buying or dealing with a property, it’s crucial to verify whether there’s an existing loan or mortgage on it. A property with an outstanding loan can lead to legal complications, so conducting due diligence is essential. In this blog, we’ll guide you through the steps to check if a property has an active loan and how to ensure a smooth transaction.
To help property buyers clearly understand how to verify whether a property has an active home loan, we have created a detailed video with practical explanations
Check the ENCUMBRANCE CERTIFICATE (EC). Loan details are reflected in the Encumbrance certificate of the property
For example, I have taken a home loan from Corporation Bank, and I have encircled the bank details in my below encumbrance certificate (EC).
NOTE:
- Loan details are reflected in EC only if the MODT is registered in the registrar's office.
- Some banks and private lenders don’t register the MODT and instead collect the title document from the borrower, which includes the Registered Deed.
To check the loan on the property:
- 1st check the EC
- 2nd, ask the property owner to show the Registered Deed.