Can a Son Take a Home Loan on His Father's Property?
Oct 29, 2024
“Guide to understand how a son can take a home loan on his father's property”
Yes, a son can take a home loan on his father's property. However, in the UK or many other countries, securing a home loan or mortgage on a property owned by someone else, for instance, a father has its unique legal and financial requirements. Generally, mortgage loans demand the applicant be the owner or co-owner of the pledged property. But there are other ways by which a son can get funding associated with the father’s property such as joint mortgages, gifting of property or Inheritance arrangements. This guide highlights the process of taking a home loan on a father’s property.
Seeking Home Loan on Father's Property: Key Scenarios and Considerations
A son may indeed take out a home loan on his father's property, but there are specific financial and legal requirements that must be fulfilled. The following are the main situations and things to think about:
1. Ownership Transfer Requirement
Most of the lenders want the borrower to own the house fully or partly to grant the home loan. In case, the father remains the legal owner, the son is not in a position to obtain a loan on the property. A father must convey the title to the son via a gift deed or by transferring the title under the son’s inheritance to make him eligible to seek a home loan.
2. Joint Loan Option with the Father
If the father is alive and willing, both can take a joint home loan and become joint borrowers of the loan. In such a case, the father’s property is pledged and both their earnings will be taken into account for determining the eligibility. The father has to be the owner of the property or a joint owner and the son has to assist in repayments of the loan.
3. Loan Against Property (LAP)
The father can apply for a loan against property (LAP) and the son can contribute to the income for repayment of the loan. Although the loan is officially in the father's name, the property serves as collateral in this instance.
4. In Case of Inherited Property
In cases where the son has acquired the property or has joint ownership of the property, the son may apply for the loan. The potential borrowers may be rejected if the property is still in dispute or the title to the property is not definite.
5. Required Documents and Permissions
The son might require a NOC (No-Objection Certificate) from other family members if the property is ancestral or has several legal heirs. To be used as collateral, the property must have a clear legal title.
In conclusion, a son cannot officially take a home loan on his father’s property unless there is a title or co-title deed in his name. Joint loans, gifting, and loans against property are some options available. Loan agreements, title deeds, and no-objection certificates are some other critical paperwork without which loan processing becomes a discomfort. It is also advisable to seek professional assistance from lawyers and those who offer loans to work out the issue and finalize the best financing that fits the family and the financier.
