A loan against property is a long-term commitment to pay EMIs timely on a regular basis. In case a borrower faces difficulties or defaults on EMI repayment, the lender takes possession of the property and sells it to recover the loan amount. Therefore, a loan against property balance transfer can be a viable choice for borrowers to switch their lenders for a lower interest rate and improved services.
This article will cover all the necessary information related to a loan against property balance transfer, its benefits and importance, eligibility criteria, documents required, application process and so on.
What is the meaning of a loan against property balance transfer?
A loan against property balance transfer stands for the facility that lets a borrower transfer the balance amount on an existing loan against property. This allows the borrower to avail affordable interest rates and competitive loan terms. The new lender will be responsible for paying the loan amount to the previous lender and taking over the credit facility of the borrower.
Moreover, this permits borrowers to have a lower interest rate staying in the same loan plan. Most financial institutions provide a hassle-free process of loan against property balance transfer along with quick approval.
Benefits of loan against property balance transfer
The provision of a loan against property balance transfer provides several benefits to the applicants. These include:
- Lower interest rate
When transferring credit to a new financial institution with lower interest rates, loan against property balance transfer enables borrowers to get reduced interest rate on the existing loan.
- Quick approval
Applicants can avail a loan against property balance transfer approval within 24 hours of the application and document verification from certain lenders.
- Doorstep services
A balance transfer scheme also comes with better terms of services and policies from a financial institution. For instance, some lenders provide doorstep documentation pick-up service for speedy approval. This ensures that there will be no logistical delays to hamper the process.
- Top-up loan facility
While transferring an existing loan against property, borrowers can also request a top-up along with the ongoing loan amounts. A top-up loan enables borrowers to have additional funding with better lending terms on their existing loan. In that case, borrowers can request a top-up loan of up to Rs.1 crore depending on their eligibility.
- Online calculators
Borrowers can also have access to a loan against property EMI calculator to calculate the new payable EMI. These tools are also beneficial to calculate how much they can save on the new policy by transferring the balance.
- Loan tenor change option
Along with a faster application process, a balance transfer also allows customers to revise their loan tenor. Therefore, borrowers can repay their loans faster or extend it as well.
- New offers
Several financial institutions provide additional offers or schemes for selecting their lending services in a balance transfer.
Interest rate and fees for loan against property balance transfer
Financial institutions offer loan against property balance transfer to salaried, self-employed professionals with a reduced interest outflow. In this regard, self-employed borrowers can benefit from interest rates as low as 9.85% per annum depending on their eligibility.
Whereas the interest rates start from 10.20% per annum for salaried and other professional borrowers. Moreover, there will be minimal fees and charges associated with the balance transfer which can vary from lender to lender.
Eligibility Criteria for loan against property balance transfer
A borrower must meet the following criteria to become eligible for a loan against property balance transfer:
- An applicant must be a salaried or self-employed professional.
- The borrower should have an ongoing property loan from a financial institution.
- The applicant must be an Indian citizen.
- A borrower’s CIBIL score must be of or higher than 700.
- The borrower’s age should be at least 25 years (for non-financial property owners, it is 18 years).
- At the time of loan maturity, the borrower should be between 25 years and 70 years of age.
- The applicant must have all the essential documents related to the ongoing loan, including the loan agreement, property papers etc.
- The borrower needs to fulfil the eligibility parameters in accordance with the new lending institution, such as income, the loan-to-value ratio and age criteria.
Documents required for a loan against property balance transfer
Here are the documents required for the successful application of a loan against property balance transfer:
- KYC documents proving proper identity
- Documents related to the proof of income
- Bank account statement of the last 3 months
- Proof of business (for self-employed individuals only)
How to apply for a loan against property balance transfer?
The balance transfer of a loan against property requires some easy and simple steps that take just a few minutes. Follow these steps to complete the application process successfully:
Step 1: Go to the official website of the Loan Against Property application of your desired lender.
Step 2: Choose the ‘Employment Type’.
Step 3: Now, select ‘loan against property balance transfer’ from the ‘Loan Type’ menu.
Step 4: Provide all the property, identification, and lender details.
Step 5: Enter income details and lastly submit the application form.
After the successful submission of an application form, a representative of the financial institution will contact the applicants to guide them through the next steps.
Loan Against Property EMI Calculator
Individuals opting for a loan against property balance transfer should check their loan terms and calculate the interest before applying for one. Loan against property EMI calculator is a free tool where applicants can easily calculate their EMIs and plan their finances accordingly. To calculate the EMIs, follow these steps:
Step 1: Select the principal amount.
Step 2: Select the desired tenor.
Step 3: Choose the interest rate.
The LAP EMI Calculator will provide results of the EMI amount, total interest payable, and the total repayment amount.
In addition, various lenders also provide pre-approved loan offers to speed up the loan application process on products including LAP or home loans. Existing customers can check their pre-approved offers by entering their names and phone numbers.
Comparing loan terms from several lenders, individuals can strategically plan their finances for the long run. Once the lender is finalised, borrowers can proceed with their chosen lender through a simple online application submission. Hence, individuals should apply for loan foreclosure from the previous lender and prepare a new loan agreement with the new financial institution for a loan against property balance transfer.