A balance transfer is a facility provided by banks or NBFCs which allows customers to transfer loans from one lender to another. It often comes with lucrative credit terms, such as lower interest rates and improved customer service. After the old loan is paid off, the borrower is responsible for paying his/her outstanding loan balance to the new lender.
The following sections cover all essential information on a loan against property balance transfer.
Reasons to opt for an LAP balance transfer
There are several added advantages of availing the balance transfer facilities for a loan against property. Here are the most important reasons:
- Lowered interest rate: One of the main reasons to opt for an LAP balance transfer is to take advantage of lower interest rates. Since lenders provide competitive rates, it is quite logical and makes sense to consider switching to a provider offering a reduced interest rate. One can also switch from fixed to floating rates and vice versa. However, there are various charges applicable for such a facility.
- Consolidation of debt: Debt consolidation is one of the major benefits of a loan against property balance transfer. It simplifies the task of managing multiple credit facilities and allows for a more convenient repayment process. The borrower also gets to renegotiate the credit terms and can change the tenure or the EMI amount.
- Enhanced financial services: In many cases, customers have the opportunity to opt for a lending institution that provides superior services.
- Opportunity for quick loan repayment: With a balance transfer, a customer gets the benefit of selecting the tenure of repayment. Therefore, the borrower gets to increase or decrease their EMIs for ease of payment or savings.
- Bank incentives: Numerous financial institutions provide attractive offers and schemes to attract customers into selecting their lending services. Some lenders offer a top-up loan based on the borrower’s loan balance for a loan against property balance transfer.
Eligibility for loan against property balance transfer
The loan against property eligibility criteria varies from one lender to another. Here are the standard parameters applicable for balance transfers.
- Applicant’s age limit: The age of a borrower applying for a balance transfer has to be at least 25 years. It can be as low as 18 years if the property is non-financial. The maximum age limit is 70 years upon maturity. It can be 80 years if the applicant is a non-financial property owner.
- Applicant’s nationality: The applicant has to be of Indian nationality and residing in a town or city where the lender is operational.
- Credit score: A CIBIL score of 700 and above is considered ideal for faster loan approval and lower interest rates.
- Occupation: Salaried, self-employed and self-employed non-professional individuals are eligible to apply for a loan against property balance transfer.
Several documents are required for a loan against property balance transfer. Some of these are:
- Identity proof (Passport, Aadhaar card, voter ID card, PAN card)
- Income proof (salary slips, Form 16, IT returns, audited financials)
- Ownership proof of the mortgaged property (property-related documents)
- Business proof (applicable for self-employed applicants)
- Bank account statement for the last 6 months
How to select an ideal lender?
The process of choosing a lending organisation offering the most lucrative offer is often seen as the toughest thing to do. Here are some useful tips for selecting a lender for transferring the loan balance of an existing LAP.
- Interest rate
When selecting a lender, one of the core aspects is comparing the rate of interest of new loans compared to the current one. While making such a comparison, one may have to calculate the total interest due along with the principal. To avoid such complexities, one can always use an online loan against property EMI calculator.
Several lenders provide pre-approved offers to creditworthy customers with a good track record. This can be based on the credit score of an individual and the products can range from a personal loan, home loan or loan against property and more. One can check their eligibility for pre-approved offers by checking the lender’s website.
- Additional charges
Interest is not the only expense associated with a loan. There can be various additional charges, ranging from a few hundred rupees to a percentage of the loan amount. It is important to consider all charges associated with a new loan as they collectively comprise the overall loan cost.
- Repayment terms
One must look for a lender offering customisable loan repayment options to meet income-earning patterns. As a result, borrowers can easily service their loan amount on a regular basis without any stress or hassle.
- Transaction convenience
Always prefer a lending organisation with a wide network of branches throughout the country. A lender with a wide network of branches allows customers to access their service from multiple points with ease.
- Ease of filing an application
The application process for the balance transfer should be simple and easy for the applicants, ensuring that it consumes less time and involves a reasonable cost.
Application guide for LAP balance transfer
Following are the detailed steps to apply for a loan against property balance transfer:
Step 1: An applicant needs to visit the chosen lending organisation’s online portal and click on the ‘balance transfer’ service to apply.
Step 2: Then, they need to enter the PIN code of their residence.
Step 3: The applicant is required to enter basic details like name, contact number, email ID, etc.
Step 4: For the type of loan, one must select ‘loan against property’. Then, the applicant should enter their net monthly income, PIN code and the amount of balance to be transferred.
Step 5: After that, one must enter the OTP received on their phone number to verify it.
Step 6: The applicant is required to enter further details like the location of one’s mortgaged property, PAN details, and current EMI obligation.
Step 7: Finally, the applicant should click on ‘submit’.
Step 8: For further processing, a representative from the lending organisation will get in touch with the applicant.
Step 9: If the lender finds everything to be in order, it will sanction one’s loan application and disburse the amount.
Transferring the balance amount of a loan against property to a new lending institution at a lower rate of interest is always lucrative as it sounds. This results in an increased amount of savings from lower EMI payments. A borrower should always look out for better options and switch to a lender if he/she gets better deals.
The process of loan against property balance transfer is quite simple and the request will get faster approval if all documents are in place.