Sold SBP SURAKASHA along with home loan

POSTED BY D.sathyanarayana reddy ON February 7, 2014 9:40 am COMMENTS (15)

I took home loan rupees 13L, interestt is 10.50 per annum loan term is 20Y,bank officials calculated and fixed my EMI 14000/- including sha sbp surakasha premium i have been paying since last 14 months , now bank officials saying we are excluded the sbp surakasha premium from EMI,now you have to sbp surakasha premium separately to bank, Is it compulsory to take insurance with home loan.

15 replies on this article “Sold SBP SURAKASHA along with home loan”

  1. ashalanshu says:

    Dear Rahul, the term cover or mortgage term cover has nothing to do with property dispute. This insurance ‘ll be beneficial only if the borrower dies during loan term and from the claim amount, the loan amount ‘ll be repaid.

    Regarding disputed property, bank can initiate legal proceedings against the borrower for not repaying loan. Attaching the property is only one of the available option. Remember, borrower is liable to pay back the loan, not the mortgaged property.

    Thanks

    Ashal

    1. rahul123 says:

      Thanks for the information.

      Regarding the borrower’s liability – if the property is disputed how can bank recover it? Due diligence and accessing the borrowers credit worthiness is financial institutions job. In case if (of disputed property) the borrower decides not to pay the loan amount, bank is left with the mortgaged property- they can not touch other assets of the borrower….Don’t you think, it is risky for bank?

      Thanks,
      Rahul

      1. ashalanshu says:

        Dear Rahul, please read the T&C of the loan. The loan is borrower’s responsibility. Dispute on property is not an excuse to stop repayment. Even beyond the mortgaged property (already in dispute), bank or financial institution may take corrective actions to recover it’s due amount. If it means attaching more properties from the borrower, so be it.

        Thanks

        Ashal

        1. rahul123 says:

          Dear Ashal,

          What happens if the borrower don’t have any other property/asset?

          Also, generally how bank covers their risk in this scenario?

          Thanks,
          Rahul

          1. ashalanshu says:

            Dear Rahul, bank ‘ll opt for court cases and prosecution. Whatever little assets and investments are there, ‘ll be attached to bank under the Court’s decree.

            Thanks

            Ashal

            1. rahul123 says:

              Thanks Ashal for the information…

              Rahul

  2. luckyr18 says:

    Dear Ashal,

    Can u please provide us any circular or guideline to show to banks, that insurance is not mandatory with home loan at all.

    Because bank officials didnt listen to us and they asked us to show the document that where is written that insurance is not mandatory ?

    1. ashalanshu says:

      Dear Lucky, please file a RTI with bank branch to ask them the circular forcing the cross selling of insurance with home loan.

      RBI circular is there on the subject matter but your own RTI ‘ll do the job easily for you.

      Thanks

      Ashal

  3. ashalanshu says:

    Dear D.Sathya, are you having personal term cover already? If not, please purchase around 15-20 times of your yly income as sum assured for your personal term cover. After that dump this policy forced on you by SBI.

    Thanks

    Ashal

    1. rahul123 says:

      Dear Ashal,

      I have a doubt here, how can a term insurance be a substitute for Home (loan) insurance?

      What happen if the property for which bank lends money is turned out to be disputed and if borrower don’t want to pay the EMI? How will bank recover its money in this case?

      Thanks,
      Rahul

      1. ashalanshu says:

        Dear Rahul, you mean to say, your loan term cover, ‘ll provide cover if there is a property dispute?

        Thanks

        Ashal

        1. rahul123 says:

          Dear Ashal,

          There are two parties involved
          1. Bank
          2. Borrower

          Now the question is, why borrower should buy an insurance and why lender (bank) should force him to take one?

          Let’s see banks perspective
          1. In most of the cased the home loan is provided by mortgaging the property.
          If buyer don’t pay the EMI, bank will sell the property and recover the amount.
          2. What happens if property is disputed? Buyer will simply don’t honor his contract with bank, now how will bank cover the home loan.
          3. Hoes the insurance cover for housing loan covers banks (lending) risk as well?

          Similarly you can tell us about the benefits that a borrower get from buying a home loan.

          Thanks in advance

          Rahul

  4. roshan says:

    You could also buy a term insurance with bank as nominee if i am not mistaken

  5. rahul123 says:

    Completely agree with KramKiran….If there is no significant difference in the premium amount then you can take the home insurance cover from same financial institute.

    It is not really compulsory, but its very difficul to convince those bank officers .

    Thanks,
    Rahul

  6. kramkiran says:

    Loan cover insurance to cover loan risk is always good to take. You can take this from any insurance company.

    However, SBI can’t force you to take it from SBI only. You can take it from other company if the premium is low outside.

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