• How to exit from lock-in period from loan on property

Hi Sir / madam,
I have taken loan against property from a NBC, 8 months back there is no dues in my EMI. They have taken acceptance for lock-in period for 2 years, now I want to sell my house; please let me know how to sell my property / house in this lock-in period. Is there any way to exit from lock-in period? Please let me at the earliest.
Asked 1 year ago in Property Law
Religion: Hindu

3 answers received in 10 minutes.

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28 Answers

See you have to see the foreclosure terms in the loan agreement the bank cannot bound you not close loan or sale property for 2 years though it can charge interest in case foreclosure is before 2 years.

Shubham Jhajharia
Advocate, Ahmedabad
25518 Answers
147 Consultations

5.0 on 5.0

Dear Sir,

You are suggested first to clear the loan/account taken with NBC and then you will be sole owner of the property. After this, you will be able to sell that property. For clearance of loan with NBC, you may talk with buyer, enter into agreement, take the money in advance and then complete the formalities of loan clearance. After that go for registration. 

Ganesh Singh
Advocate, New Delhi
6629 Answers
16 Consultations

4.5 on 5.0

You need to release the mortgage and get the papers from bank. Generally they take the papers and mortgage the same

Prashant Nayak
Advocate, Mumbai
24239 Answers
51 Consultations

4.4 on 5.0

Have you prepaid the loan ? 

by lock in period you mean to say that loan cannot be repaid for 2 years kindly clarify 

Ajay Sethi
Advocate, Mumbai
84068 Answers
5480 Consultations

5.0 on 5.0

If you want to sell property and loan is not repaid you need consent from NBFC for loan repayment 

Ajay Sethi
Advocate, Mumbai
84068 Answers
5480 Consultations

5.0 on 5.0

Since, the property is mortgaged a charge is created on the property prohibitng the same from sale by you. Serve the NBC a notice of foreclosure in respect of your loan against property wait for their reply and act further as per the reply.

Filing a Suit in the court of jurisdiction is also an option in case the NBC wont budge.

Ayan Sharma
Advocate, Kolkata
6 Answers

Not rated

1. Firstly ask for copy of all loan related documents like loan agreement.

2. Ask for foreclosure terms based on that further course can be advised.

Shubham Jhajharia
Advocate, Ahmedabad
25518 Answers
147 Consultations

5.0 on 5.0

1. You can sell house by taking NOC from the NBFC. The buyer party can repay the EMI's /Balance outstandings, via transfer of loan to new buyer.

Hemant Agarwal
Advocate, Mumbai
5546 Answers
25 Consultations

5.0 on 5.0

Yes you can talk to nbc and do the needful 

Prashant Nayak
Advocate, Mumbai
24239 Answers
51 Consultations

4.4 on 5.0

You can talk to  the bank manager about this and express that you are willing to pay the penalty towards exit  from this loan during lock in period.

Lock-in period, in another context, is the period during which the borrower cannot fully repay the loan without paying a penalty. Many lenders have such polices to ensure that they are able to cover the cost of processing and marketing the mortgage loan.

Recently the Indian government decided that the lock-in period did not apply to hotels, resorts, hospitals, educational institutions, and special economic zones (SEZs).

T Kalaiselvan
Advocate, Vellore
74174 Answers
1203 Consultations

5.0 on 5.0

You will be levied with exit load if you want to exit the home loan during lock in period.

If you are willing to bear the same, you can talk the manager and get it solved.

The conditions mentioned in the loan agreement is the rules and legal guidance in this regard, hence you cannot look for something beyond that.

 

T Kalaiselvan
Advocate, Vellore
74174 Answers
1203 Consultations

5.0 on 5.0

Dear Sir,

You just need to ask that process for closing the loan prematurely/immediately. 

Ganesh Singh
Advocate, New Delhi
6629 Answers
16 Consultations

4.5 on 5.0

As long as you do not pay back the liability ie tge loan, you cannot sell.

Rahul Mishra
Advocate, Lucknow
13048 Answers
42 Consultations

5.0 on 5.0

You may only sell when the loan has been paid. 

Rahul Mishra
Advocate, Lucknow
13048 Answers
42 Consultations

5.0 on 5.0

Dear Sir,

Paying a large down payment can help reduce the EMIs and reduce the interest rates too.  When you choose a lower rate of interest, you are also choosing a shorter tenure. If you believe that you can repay the loan faster, by paying off high EMIs, then you can opt for a lower tenured loan.

Kishan Dutt Kalaskar
Advocate, Bangalore
5948 Answers
317 Consultations

4.8 on 5.0

Lock in not binding on you. You are free to sell once loan is paid.

 

Yogendra Singh Rajawat
Advocate, Jaipur
21439 Answers
31 Consultations

4.4 on 5.0

- As per rule, Lock-in period is the period during which the borrower cannot fully repay the loan without paying a penalty, and this may be :- 

1. The period of time during which a loan may not be prepaid.

2.The period of time during which a lender will guarantee a certain interest rate on a loan to be extended by it in future.

-  Further, the Lock-in -period may be two to five years , and the conditions generally mentioned in the agreement which executed at the time of sanctioning the loan. 

-  You should talk the bank manager after stating that you are ready to bear the extra burden of interest of Lock-in period on the outstanding dues . 

Mohammed Shahzad
Advocate, Delhi
7982 Answers
85 Consultations

5.0 on 5.0

1. There is no restriction in selling a property during lock in.

2. The problem, is in getting a buyer who can come to meet you , get an advocate to inspect your papers and then pay you.

3. So even if law has put no hindrance due to practical difficulty you can not sell the property now unless some fool pays you even before getting satisfied with the title of the property.

3. Moreover before selling the mortgaged the property you need to either foreclose the loan or to get the buyer transpose himself in your loan account.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
363 Consultations

5.0 on 5.0

Search a buyer who can clear out the loan 

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

4.8 on 5.0

Hello,

I have read your query and I hope i am able to provide you with sufficient information.

Since there is a lock-in period for 2 years so don't try to breach that condition and that could lead to violation of terms of contract and the bank can sue you for breach of term of contract in a court of law.  

 

You can obtain a Loan Closure report or NOC from the bank after all the amount has been settled and the bank has received its legally recoverable amount. Once the payment is made and the loan is closed, you can as the bank to give you a loan closure statement or an NOC, stating that they have no interest and objection in the said property as all the loan amount has been paid and there is no outstanding as on date and the loan account has been closed. 

After obtaining the Loan Closure Statement/ NOC from the bank, you can sell of the property. Provided the NOC should also expressly state that condition for lock-in period has been dispensed with and such a statement should be made in the NOC. You can contact Bank and on Mutual terms you can also resolve this issue. 

 

I hope I am able to provide you with sufficient information. For further information you can follow up this question. Please give a rating according to the satisfaction. Your ratings are important for us to grow. 

 

Thanks and Regards!

Varun Talwar, Advocate Delhi High Court. 

 

Varun Talwar
Advocate, Sonipat
27 Answers

Not rated

1. Your query has been couched in ambiguity. Is the lock in period against pre payment of loan or sale of property after pre payment of loan?

2. The lock in period is only against the pre-payment of loan by the borrower. Most sale agreements prescribe an exit load if the loan is to be prepaid before the expiry of lock in period. So if there is such a clause in the agreement which prescribes an exit load, and you are willing to pay the exit load, you may prepay the entire loan.

3. Once the loan is prepaid in entirety you are free to sell the property.

Ashish Davessar
Advocate, Jaipur
30745 Answers
913 Consultations

5.0 on 5.0

Hi, the government offices are operating even during the lockdown..You can sell your property and the sale deed can be made at the registrar office 

Hemant Chaudhary
Advocate, Gurgaon
4609 Answers
53 Consultations

4.9 on 5.0

The concept of lock-in-period is to stay put with the lender till end of two years and pay EMIs.

If there is a Pre-closure facility in the agreement, you can pay the balance and close the account and take NOC. 

In case if you have repaid the entire loan borrowed by you, you need to take NOC & take back your original documents from NBFC and you can sell the property to third party.

S Srinivasa Prasad
Advocate, Hyderabad
2877 Answers
9 Consultations

5.0 on 5.0

I would advice you to follow the below mentioned steps to sell your property acquired on loan from NBFC:- 

1- Please find a buyer for the property and enter into MOU convincing him to enter into an agreement for sale after receiving full amount equal to loan amount payable to bank with interest, penalty and foreclosure payments. 

2-After MOU and amount received from Buyer ,Please contact your banker for foreclose of entire loan amount with all consequential expenses which would be appearing one of the important clauses in Loan Agreement .

3-Bank can not stop you for foreclosure whenever you want to foreclose the loan amount as per the agreement and provisions of Civil Law.

4- Even if Bank doesn't agree with you ,Please invoke your right approaching High Court to issue an appropriate writ in extraordinary writ jurisdiction of High Court against the Bank for allowing you to foreclose your loan  account against the Bank before the time mentioned in the Agreement. 

You would definitely succeed in the aforementioned process. 

 

Ramesh Pandey
Advocate, Mumbai
2541 Answers
8 Consultations

5.0 on 5.0

Sir/Madam, you have to give me details of the loan. If it is a government subsidised loan (for e.g., Pradhan Mantri Awas Yojana), the lock-in period cannot be waived. If it is a normal loan, lock-in period will not apply if you have fully paid off the loan and there are no more E.M.Is. 

Balaji Iyer
Advocate, Bengaluru
18 Answers
2 Consultations

5.0 on 5.0

after getting the consent or in-principal approval from the bank. This has to be done in a manner that part of the sale consideration will be paid directly to the lender or lending bank and the remaining balance (if any) shall go to the seller/current owner.

Mohammed Mujeeb
Advocate, Hyderabad
19011 Answers
28 Consultations

4.5 on 5.0

Consent required from NBFC. it's best to contact your lending bank. 

Mohammed Mujeeb
Advocate, Hyderabad
19011 Answers
28 Consultations

4.5 on 5.0

1. Home loan with lock in period is not good if you want to sell the property during lock in period.

2. You have to pay a penalty at fixed percentage of your outstanding loan amount which can be between 2% to 5%.

3. You can negotiate on amount of penalty which is to be levied upon you but chances are very low that your loan provider will go for negotiations as you have signed a contract with them at time of getting the loan. 

Mohit Kapoor
Advocate, Rohtak
10688 Answers
7 Consultations

5.0 on 5.0

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