loan for home loan

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Garima (Querist)

13 September 2009 Mr Z has taken a home loan @11% three years back.
Now he wants to repay them .
for this purpose he has an option of taking a loan from a person whom he doesn't know much about.
my question is should he opt for this? if yes, then what is the procedure for taking this loan?
someone told me to have this in a stamp paper.is it correct.
I need ur valuable advice as early as possible.

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)

13 September 2009 As far as my knowledge is concerned, taking loan from open market is always costlier then the banks, if it is taken from some unknown or lesser known sorces. In your case, if Mr.Z doesn't know the person very well, then he should avoid it to save himself from further fraud or any other litigative possiblities. Even if he wants to go for this solution, then make an agreement on prescribed Stamp paper, and insert all clauses into it including interest and payment plans. And yes, dont forget to mention the clause of litigation matters jurisdiction into the agreement. Also, take proper witness of two relaible persons on this agreement and get it registered from the court. But before going on this option, I will again advise him to calculate the benefits from this switching.