What are Implications of death of home loan borrower?

Buying a grand house is every Indian's dream. While earlier most people bought a house after their retirement, modern people can become a homeowner in the early stage of life. This has been possible due to relaxation in home loan policies. In India, many people have successfully purchased their first home under PMAY. The scheme provides subsidy on interest, which makes loan repayment easier. But this does not mean that you will get any debt forgiveness.

Among the various reasons for nonpayment of a home loan, the borrower's death is the most common cause. The common question for every home loan borrower is what will happen to their home in case of their death. Will it force his family to vacate the house as the bank immediately takes over the property? Or, will all the installments of his home loan go in vain upon his death?

Well, before taking this topic further, let us explore the different categories of loans and the provision of loan repayment in each case.

1) Joint Loan - This type of home loan is taken jointly by two borrowers. If the primary borrower dies, the right to repay the home loan is given to another borrower. However, if the surviving co-applicant refuses to repay the loan balance, the lending bank may seek legal recourse in the civil court or the Debt Recovery Tribunal.

2) Secured loan- A secured loan is one in which the borrower pledges certain assets in case of failure to repay the loan. If the borrower of the secured loan dies, his / her spouse or heir will have to inform the bank about the same by presenting the death certificate.

In this case, the bank cannot take any coercive measures to force the surviving spouse or heir to repay the debt. In addition, for the recovery or enforcement of security, it must comply with the law.

3) Unsecured loan- In this case, the lending bank cannot claim unpaid loan from the surviving borrower or heir of the deceased borrower. However if the deceased borrower has left any property in the name of his partner or heir, the creditor can recover the outstanding amount by selling them after initiating appropriate legal action.

We conclude that things do not change much by the borrower's death. The loan still exists and has to be repaid by a co-partner, spouse or legal heir. The family of the deceased borrower can handle the mortgage in several ways. Here, we have mentioned some simple tips in this regard.

Tips 1- Repay the loan as per your convenience

The survivors can inform the bank about the demise of the borrower and continue to repay the loan. It can be difficult to arrange money. But in that case, you should inform the bank about your current financial situation. Most lenders are supportive of their customers and will provide them with suitable suggestions for repaying the mortgage.

Tips 2- Repayment and Refinance

The legal heirs of the deceased borrower can refinance the loan or they can repay the loan in full.

Tip 3- Sell or rent a house

If the spouse or heir has no regular source of income to repay the loan, they can resell or rent the home. Money received in this way can be used to repay the loan.

Tip 4- allow the bank to occupy the property

The survivor may allow the bank to recover the loan by selling the house at auction. If the immovable property is more than the debt owed on it, the difference from the sale proceeds will be transferred to the heirs.

Under Pradhan Mantri Awas Yojana Gramin PMAY(G) Center for construction of 50 lakh houses in rural areas

Recently, the government said that by March 31, more than 50 lakh houses in rural areas across the country will be constructed for the poor as part of a central scheme that will bring social change in the villages.

A target was set to construct one crore new houses by 31 March 2019 under the PradhanMantri Awas Yojana - Rural PMAY (G). Of these, 51 lakh houses were to be completed by 31 March 2018, the Ministry of Rural Development said in an official statement.

The Ministry of Rural Development said in an official statement that under the Pradhan Mantri Awas Yojana (Rural), a target was set to build one crore new houses by 31 March 2019. Out of which 51 lakh houses were to be completed by 31 March 2018.

After its launch in 2016, it took some time to complete the process of beneficiary registration, geo-tagging, account verification etc. The ministry said it used the 2011 Socio Economic Census to select beneficiaries.

The homeless and those living with a kuccha roof or two kachcha rooms are the beneficiaries of this poor PMAY scheme.

The ministry said that the houses are planned by the best institutions after studying the existing local design configurations and are constructed by the beneficiaries as needed. The cost of construction of the houses is directly transferred to the accounts of the beneficiaries.

The poor are getting safe houses and can live with self-respect with facilities like toilets, drinking water facilities, electricity connections, cooking gas connections etc.

To check transparency and corruption, the Center has put in place an online policy, where anyone can view the construction of houses with geo-tagged photographs and give full details of beneficiaries and the expenses incurred to them.

The ministry has also decided to conduct a study on social change to understand the impact of the housing program. In addition, the National Institute of Public Finance and Policy will also study the impact of high demand for steel and cement on governance reforms and development under PMAY (G).

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