A loan against property may be the largest external financing that you avail over your financial lifetime. Mortgaging a property to avail a long-term loan is beneficial when you seek a high amount. This amount stretches with tenors over two decades to ease repayment. The lower rate of interest also keeps the EMIs affordable.
The total payable interest is considerably high even though the rate of interest is low as these loans have a prolonged repayment tenor. Hence, searching for the right lender is essential when you look for a loan against property. Opting for loan balance transfer is the only option to avail if you have already availed financing with a high rate of interest.
What Is A Balance Transfer Facility?
A balance transfer facility lets you transfer the outstanding amount on your loan against property to another lender for a lower rate of interest. Transferring your loan balance enables you to enjoy more affordable EMIs.
Benefits Of Balance Transfer Facility
One of the most beneficial loan against property features that you get with a balance transfer facility is a top-up loan. A top-up loan is a high-value unsecured loan that standard personal loans don’t provide. You can use these loans for any purpose without any restriction.
When To Avail Balance Transfer Facility?
You have to consider the tenor before you opt for a loan against property balance transfer as the total interest you save on your EMIs depends on it.
Calculation of EMIs –
Financial institutions may provide a repayment schedule that includes the breakup of your EMIs throughout the loan against property tenor. They calculate your EMIs based on amortisation.
Your monthly instalments remain equal throughout the repayment tenor if you are paying a fixed rate of interest. However, the portion of interest and principal are not the same throughout.
The interest portion is high during the earlier part of the tenor. It decreases and the principal increases over each EMI.
Hence, opting for a balance transfer when the tenor is about to end is not beneficial. It is lucrative during the early years of repayment.
Not calculating you EMIs is one of the things to avoid when you avail a loan against property.
Things To Remember Before You Apply For A Loan Against Property Balance Transfer:
- You May Have To Pay Fees And Charges
Your current lender may charge you a foreclose fee. However, you don’t incur this fee if you have paid a floating rate of interest instead of a fixed rate of interest on your loan against property in India.
The new financial institutions may need to pay processing fees, stamp duty, valuation charges, technical charges, legal charges, incidental charges, etc. You may have to pay Memorandum of Deposit of Title Deed (MODT) in case you are from a specific Tier I or Tier II city.
Hence, do make sure to check all of the fees that you incur when availing a balance transfer facility.
- You May Have To Provide Documents
The new lender may need you to provide documents when you opt for this facility. Some of the loan against property documents required to avail balance transfer:
- KYC documents – PAN or Aadhaar.
- Bank account statements of the previous 3
- Income tax returns.
- Address proof – any KYC document with your permanent address, municipality tax receipt, latest utility (electricity, telephone, landline mobile, etc.).
- Photocopies of the property documents to be mortgaged.
Be advised that the lending institution may ask for additional documents other than the above.
You must also satisfy the loan against property eligibility criteria of the new lender. Use property calculator to calculate the EMI amount you have to pay monthly or yearly. Companies like Bajaj Finserv need you to be between the ages of 33 and 58 years if you are salaried and 25 and 70 years if you are self-employed to become eligible for these loans.
Bajaj Finserv also provides pre-approved offers that make the process of availing loans less complicated and help you save time. Pre-approved offers are available on home loans, unsecured credits like personal loans and business loans, and a host of other financial products.
Use a loan against property balance transfer calculator to determine the total amount you save with this facility. The calculator also shows the top-up loan you are eligible for.