January 28, 2026: Redevelopment of ageing residential buildings in Mumbai often runs into delays when one or more homeowners have outstanding home loans on their apartments. While such cases are relatively uncommon in very old structures, they are increasingly surfacing in buildings that are 25 to 30 years old, especially where homes were bought later through the resale market using bank finance.
Ramana Iyer, a resident of Mumbai’s western suburbs, said the proposed redevelopment of his 40-year-old building has stalled because one member has an unpaid home loan of Rs 45 lakh. According to Iyer, the homeowner has been unable to secure a no-objection certificate (NOC) from the bank as the loan remains outstanding and cannot be cleared upfront, creating a deadlock for the entire society.
Developers point out that while many old buildings do not face such issues, resale purchases financed through home loans can complicate redevelopment. Some developers are willing to step in and offer financial assistance to help affected members settle their dues, but many remain hesitant. Even when such support is proposed, objections from other residents or added conditions can further slow down the process.
“In case of old buildings, the chances of homeowners having a pending home loan are very thin; however, there are cases where homeowners may have purchased an apartment in the resale market after the building has completed 25-30 years, and have somehow managed to get a home loan. These are the cases where a home loan is pending, and there are chances of paperwork increasing due to the same,” a developer not wishing to be named said.
Banks typically insist that outstanding loans be fully repaid before redevelopment begins, as demolition removes the asset mortgaged to the lender. “When a building goes for redevelopment, and a member has an active home loan, banks usually demand that the loan be cleared. However, in some cases, redevelopment can proceed if the developer provides an undertaking and adequate comfort to the bank. Subject to certain preconditions agreed upon by the bank, developer and housing society, the lender may then consider issuing a no-objection certificate (NOC),” said Vishal Ratanghayra, Founder and CEO, Platinum Corp.
“In some cases, developers may end up pre-paying the initial corpus or the monthly rent compensation to the concerned member, who can then use these funds to clear their outstanding home loan. This is done primarily to expedite the process and avoid delays arising from non-payment or financial difficulties faced by the member,” he added.
Redevelopment involves demolishing old structures and replacing them with larger, modern buildings. Residents receive bigger homes at no cost, while developers sell additional units. By 2030, around 44,277 apartments worth Rs 1.30 lakh crore are expected to enter Mumbai’s market through redevelopment, generating significant stamp duty and GST revenue, according to Knight Frank India.
Source: Hindustan Times
