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YOUR QUERIES (LOANS): Can you prepay your dead brother’s loan from your funds?

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The payment of the outstanding loan can be made from your funds by writing out a crossed cheque in favour of the personal loan account with the bank.

By Chaitali Dutta

I lost my brother to Covid last month. He had a personal loan of Rs 5 lakh taken last year for which he was paying the EMIs regularly. Can I prepay the remaining amount from my bank account and what is the procedure?
—Rajiv Kumar
In a personal loan, sometimes banks call for the guarantor to pay the loan outstanding if the borrower is deceased. Here, in this case, it is not clear as to whether you had stood guarantee to your brother’s personal loan. The payment of the outstanding loan can be made from your funds by writing out a crossed cheque in favour of the personal loan account with the bank.

This month I will complete paying my housing loan EMIs. Will the bank call me to handover the house papers or will I have to put in a request. Also, will they ask me to pay any other amount at the time of handing over my papers?
—Indronil Sen
On completion of the loan, you need to approach the bank for the loan closure letter, original property documents, letter of vacation of mortgage, current financial year interest certificate, etc. The borrower’s liability is only the outstanding loan and if that amount has been fully paid, there are no other expenses connected to the closure of the loan account or collection of your original papers.

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We have a plot of land in the name of my late grandfather. My father is retired. Can I take a bank loan to construct a house on the land?
—Arun Murthy
The land needs to be in your name before you start construction. Obtain a succession certificate in your father’s name from the district authorities. Later your father may gift you this land and you may start the construction on this land.

I took a loan in 2019. My lender said I am eligible for PMAY subsidy. Now, I have made three part-payments and reduced my tenure. Am I still eligible for the PMAY subsidy? If yes, will the amount be reduced?
—Prashant Dhyani
If I understand correctly, the subsidy is already credited to your account, and to that extent your EMI would have been reduced. The amount of subsidy of PMAY is directly related to the original tenure of the loan. If a loan is prepaid, then the PMAY subsidy on the unexpired tenure on a pro-rata basis has to be refunded.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to fepersonalfinance @expressindia.com

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