Aditya had always been thinking to buy a house in Gurugram but skyrocketing property prices have been keeping him away from his dream home. The recent demonetisation move by the Govt. did,however, provide some relief to him. With some research and bargaining, he finalized one nice property, but before sealing the deal, he wished to consult Kuber whom he trusted for all his financial matters.
“Hi Kuber, I have finalized a 2 BHK property in Sector 48, Gurugram. Should I finalize the deal for Rs. 90 lakhs?” Aditya went straight to the point.
“Considering your present finances, Aditya, wouldn’t this be a little over-budget for you?” Being his financial advisor for years, Kuber was aware of his net worth.
“I have been tracking this area for a suitable property for some time now. The prices are at the lowest presently. Also, to save on the registration and stamp duty charges, I have also talked with the owner to do a deal with General Power of Attorney (GPA). So, no stamp duty, no extra charges. You see, it’s a good deal.” Aditya seemed too excited.
Kuber was surprised on Aditya’s financial innocence.
“Aditya, do you know, Banks don’t prefer loan against GPA property. How will you manage without that then?”He continued.
“Oh! I am indeed banking on loan against the same. Could you just help me understand, why do banks reject applications on loan against GPA property?” Aditya seemed concerned now.
“While GPA is a legal document granting authority to one person to act on behalf of another person, it doesn’t give any ownership rights per se on the immovable property owned by the person granting the authority. Since GPA holder will not have enforceable ownership right over the property, banks generally don’t lend loan against GPA property. Besides this, a GPA is also cancelled at the will of the GPA grantor and therefore, puts the lenders to such property at much higher risk.” Kuber tried making his point clear.
Aditya seemed convinced now, but at the same time, a bit concerned too over the additional burden of stamp duty. Kuber just thought to make the situation a little lighter. “Saving stamp duty might be fine for a second but putting your ownership right at risk shouldn’t be fine at all. Isn’t it?”
“No wonder, why I trust you for all my financial decisions.” Aditya exclaimed and Kuber was all in smiles.