By Arosh John | Founder – John Real Estate (MahaRERA Registered) | Editor-in-Chief – Thane Real Estate News
Why This Is Important
In Thane and Mumbai, it is common for sellers to sell property with an active loan, while buyers also finance their purchase through a home loan. These loan-to-loan resale transactions are routine, but they require careful planning.
Without awareness, sellers may face payment delays, extended timelines, or disputes. It’s also important to understand that:
- Loan disbursement happens only after registration of the sale deed.
- A society/developer NOC is mandatory for the bank to release funds.
- Banks require all original documents before disbursement.
(For a deeper explanation of these requirements, see our earlier blogs on loan disbursement and NOC verification.)
How Selling Property with a Loan Works in Thane & Mumbai
- Transaction Finalisation – The buyer and seller agree on the price and terms.
- Buyer’s Loan Process – Bank sanction, property verification, and valuation.
- Seller’s Loan Process – Seller requests a List of Documents (LOD) and a Foreclosure Letter from their bank.
- Registration – Completed only after both the buyer’s sanction and the seller’s foreclosure letter are in place.
Scenarios Explained
Scenario 1: Buyer’s Loan Is Less Than Seller’s Outstanding Loan
- The seller must reduce the outstanding loan to equal or below the buyer’s sanctioned loan amount.
- This can be done using the buyer’s down payment (own contribution) or, if necessary, through the seller’s self-funding.
- Once reduced, the buyer’s bank clears the seller’s loan in accordance with the foreclosure letter and takes custody of the original documents upon release (typically within 10–15 working days).
- After receiving the documents, the buyer’s bank releases the balance payment to the seller in accordance with the agreed-upon sale terms.
Scenario 2: Seller’s Loan Is More Than Buyer’s Loan but Within Sale Value
- If the seller’s outstanding loan is higher than the buyer’s loan but still covered within the agreed sale value, the seller can manage the gap.
- The seller uses the buyer’s contribution (own payment) to reduce the outstanding to below the buyer’s loan amount.
- The seller’s bank issues a revised foreclosure letter reflecting the reduced balance.
- The buyer’s bank then clears the seller’s loan, collects the documents, and completes disbursement.
Scenario 3: Buyer’s Loan Is Equal To or More Than Seller’s Outstanding Loan
- The buyer’s bank directly issues a DD/NEFT in favour of the seller’s bank loan account.
- The seller’s loan is closed, and the original documents are released within ~10–15 working days.
- Once collected, the buyer’s bank completes the final disbursement to the seller.
Key Considerations
- Interest Liability – Any interest payable as per the foreclosure letter remains the seller’s responsibility unless delays are caused by the buyer.
- Document Release Timeline – Typically 10–15 working days after loan closure by the seller’s bank.
- Internal Transfers – If the buyer uses the same bank as the seller, the process is often faster, since it can be managed as an internal transfer.
- Extended Timelines – Loan-to-loan transactions generally take longer to complete than standard resale transactions. Sellers and buyers should plan for these additional timelines.
Recommendations for Sellers
- Apply early for foreclosure and LOD.
- Ensure all society/developer dues are cleared before registration.
- Anticipate longer timelines for possession in loan-to-loan cases.
- Always get acknowledgements when submitting originals or payments.
Call to Action
💬 Selling your home in Thane or Mumbai while still under a loan?
Consult with Arosh John to safeguard your transaction and ensure smooth closure.
👉 Connect with Arosh John
About the Author
Arosh John is a leading realtor in Thane with over 12 years of experience in the Mumbai Metropolitan Region (MMR) real estate market. As the Founder of John Real Estate (MahaRERA Registered) and Editor-in-Chief of Thane Real Estate News, he specialises in resale property transactions, loan-to-loan deals, premium apartments, and luxury villas. Widely regarded as one of the most trusted property advisors in Thane and Mumbai, he helps sellers, buyers, NRIs, and investors navigate transactions with clarity, security, and professionalism.
Disclaimer
This article is for informational purposes only. Processes may vary across banks, depending on loan amounts and the requirements of the society or developer. Sellers and buyers should always confirm procedures with their banks, societies, and legal advisors to ensure compliance with relevant regulations. Thane Real Estate News does not assume responsibility for financial or legal decisions made solely based on this article.
