A Home Loan is a much desired financial aid for a prospective buyer of a residential property, especially since the price of real estate often ranges from a few lakhs to a few crore rupees. Typically banks and housing finance companies in India provide 75 to 80% of the market value of the property as the loan amount. So, a buyer can make the home purchase by paying only up to 20% of the property value as a down payment. The tenure of the loan be anywhere from 10 to 30 years, and thus repayment can also be conveniently planned as per the borrower’s financial capacity.
However, things are not as crystal clear always. There have been instances in the past when an individual has applied for and availed multiple loans for a single property by approaching multiple lenders. Not only is this is an illegal act, but also puts each lender involved at astoundingly high risk, since in case of non-payment of the loan amount, they all will fall back on a single property, and won’t be able to recoup their money.
This is where CERSAI came in. Under Section 8 of the Companies Act, 2013, Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI) protects the interest of both the property buyers as well as the lenders. The primary shareholders of CERSAI are Public Sector Banks, the National Housing Bank as well as the Central Government of India, which holds a 51% share. It calls for enhanced transparency in property transactions.
This online registration is dedicated to maintaining a centralised database complete with the details of each and every equitable mortgage against property. It also maintains all the relevant information regarding the lenders, as well as the borrowers related to every property. Hence, if a borrower approaches a bank for a Home Loan, the lender quickly runs a check with CERSAI to confirm if the property has already been mortgaged with any other lender.
Each lender is required to register the details of any new property that has been mortgaged, within a span of 30 days from the date of the deal. Evidently, this process incurs nominal expenses of Rs. 50 for all Home Loans under Rs. 5 lakhs, and Rs. 100 for all Home Loans above Rs. 5 lakh.
Before setting up CERSAI, the details of a property and its mortgage status
relied solely on the borrower’s discretion and the lender’s vigilance, which was a result of the disjointed system of registration. CERSAI was therefore created with the aim to –
Maintain a centralised registry of rightful mortgages
Recognise and keep a check on any fraudulent activity pertaining to lending against equitable mortgages, thereby deterring borrowers from taking out several loans from various lenders on a single asset.
Help the lenders stay more aware regarding the status of a property’s existing liability.
Protect prospective buyers from fraudulent sales, when homeowners try to make an unscrupulous sale of property with unpaid loans still attached to them.
Maintain relevant information on mortgages or loans that have been taken out on an asset or property.
Maintain relevant information regarding the lender of Home Loan as well as the borrower of a property.
Allows banks, Housing Finance Companies, and NBFCs to register any transactions regarding asset reconstruction as well as securitisation.
Include the registration of any security interests that were created through the assignment of factoring or accounts receivables.
Include registration of various types of mortgages prevalent in India, along with the registration of any security interests that are created on intangible assets, such as book debt.
In accordance with a directive issued by the Central Government, it is mandatory for all lenders including Banks, Housing Finance Companies and NBFCs to register complete information regarding any security interest that are being created with the CERSAI. This registration must be completed within 30 days of the creation of such security interests.
In a bid to ensure exceptional transparency and protect all the involved parties from any fraudulent activities, the CERSAI registry platform can be conveniently accessed online by any individual, bank or financial institution, on the payment of a small fee.
In order to ensure that no security interest has been created on a particular property at an earlier point in time, by a different lender, a lender is liable to pull up the relevant information on the property before sanctioning a loan to the borrower.
The same holds true for a potential property buyer, as they can use the platform to access information about the property that they are about to purchase and find out if the said asset is free of any past liability or loan.
To register a property with CERSAI, one can conveniently do so on the official CERSAI website. Once you are on the website –
Fill the online registration form, available under the ‘Entity Registration’ section
Next, print the forms, and sign them.
Then, send the duly filled and signed forms to CERSAI’s Address.
If you wish to gain access to the CERSAI portal – fill in the relevant details, along with your digital signature.
Also Read: 6 Home Loan Charges You Should Know
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