Will Homeloan takeover settlement cheque/dd be account payee to home loan account or saving account?

POSTED BY roshan ON March 5, 2014 12:20 pm COMMENTS (2)

I have appplied for a takeover of loan. My question is if the bank taking over my loan will give a takeover settlement cheque/dd which is account payee to

a) Savings account

Or

b) Home Loan account

If b)

Assume that on Feb 1 my total outstanding is 20,70,000. I apply for a takeover loan with another bank which takes 29 days to sanction the loan. On March 1 the bank taking over my loan gives me a cheque/dd of 20,70,000 which is account payee to my home loan account and not savings account. However meanwhile my existing bank debits emi at end of the month which brings down my outstanding amount to 20,64,0000.Now when i deposit the cheque of 20,70,000 to home loan account there will be a surplus of 6,000 in my home loan account. What happpens to this amount? will this be credited back to my savings account?

2 replies on this article “Will Homeloan takeover settlement cheque/dd be account payee to home loan account or saving account?”

  1. roshan says:

    Hello Raja,

    Thanks for the response. I will most likely fall in 2nd scenario .

    Regards,
    Roshan

  2. Raja says:

    Take over bank will give you a cheque/DD favouring the home loan account. You cannot encash it.

    There can be 2 cases based on when you deposit the DD with the bank,

    1. The outstanding is more than the DD amount as interest for the month has been added to the outstanding principal you last checked. Usually the Take over bank takes this into consideration while issuing DD, but still if such a thing happens, you will have to pay the balance amount into your home loan account while handing over the DD.

    2. The outstanding is less than the DD amount as EMI for the month has been deducted. In this case you can still go ahead and submit the DD. The excess amount you have paid will get credited back to your saving account (one that was linked to the home loan) once the home loan gets closed. You can take a confirmation regarding this from the home loan branch.

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