Complete Details Loan Against Property Balance Transfer

January 05, 2023

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A balance transfer is a facility that allows a customer to switch their lender for an improved or lower interest rate and services. Consequently, the new bank will be liable to pay the outstanding loan amount to the previous bank and take over the customer’s credit facility. This special provision allows borrowers to avail of lower interest rates while still in the same loan plan. This assists the customer in a myriad of ways.

Firstly, the monthly instalment situation is revised to a relatively lower amount. Secondly, customers will benefit from switching to a more reliable financial institution. Furthermore, borrowers will not be required to take multiple loans simultaneously.

However, with several advantages, customers will also be required to adhere to the bank’s policies pertaining to the parameters they need to meet.

Features and Benefits of LAP Balance Transfer

The Loan Against Property Balance Transfer scheme states that one has the provision for moving part or the whole of their loan to another lender. This provision also comes with various advantages attached to it. Some major benefits of a loan against a property balance transfer scheme are explored below.

  • Reduced Interest Rate – One of the advantages of the LAP balance transfer scheme is that one can procure the same loan against property on a reduced interest rate basis. Given that lenders have competitive interest rates, it makes sense that one switches to a provider that offers a reduced interest rate if given a chance.
  • Debt consolidation – Another biggest advantage of opting for a Loan Against Property Balance Transfer is that one can consolidate their debts. This can assist in the hassle-free monitoring of the finances and continuing the loan repayment process from where it was left off, along with a lower interest rate.
  • Improved financial services – More often than not, customers can get a better financial institution in terms of services and policies. A balance transfer scheme can assist customers in procuring affordable interest rates and increased tenures.
  • Fast loan repayment opportunity – Availing a balance transfer facility can land a customer an opportunity to choose their loan tenure, thus enabling them to pay their loans faster.
  • Bank rewards – Various banks offer lucrative offers and schemes for choosing their lending services.

Eligibility and Documents for Salaried Applicants

Eligibility criteria set a standard of requirement and expectancy. Generally, to get a loan against a property balance transfer scheme, a borrower must have at least 12 EMIs left and a good credit score.

Furthermore, banks may prescribe additional loan facilities depending on the credit score and borrower profile.

Applicants who come in the category of earning a regular income will have to adhere to the following eligibility criteria.

  • First and foremost, applicants must be a citizen of India.
  • The applicants must be in the age group of 23 to 70 years.
  • The customer should be ideally employed in an MNC, public sector company, or private sector company.
  • The loan tenure will be offered per the applicant’s profile and can be extended per bank policy.

Furthermore, applications should be attached with a few mandatory documents, including the following.

  • Identification documents such as Aadhaar Card, PAN Card, Voter ID, or other government-issued identification cards
  • Address proofs such as Aadhaar Card, PAN Card, recent electricity bill, utility bills, etc.
  • Bank statements from the last six months.
  • Property documents and a valuation certificate.
  • Income tax return papers

Eligibility and Documents for Self-Employed Applicants

Self-employed applicants need to fulfil certain requirements as well. These are slightly different from the salaried employee’s requirement as self-employed applicants would also be asked to present their business details. The guidelines that self-employed applicants need to fulfil are as follows.

  • The interested customers need to be a resident of India
  • They should be within the age range of 25 to 70 years
  • The categories can include both professionals and non-professionals. However, they should be self-employed. The accepted professions can include doctor, Lawyer, Chartered Accountant, Architect, Consultant, Engineer, Company Secretary, Etc. The accepted non-professions can include Trader, Commission Agent, Contractor, Etc.
  • The applicant should also be able to prove that their income

How to Apply For a Loan Against a Property Balance Transfer?

The first and foremost step of making any application submission is to check whether one is eligible for the scheme. After assessing the parameters one needs to adhere to, customers can shop for the best interest rates across several banks. Many banks may offer lower interest rates and increased tenures as well. It will be prudent to enquire about the prepayment facility, processing fees, and any additional charges that may apply. The best way to compare rates is to use an online Loan Against Property EMI Calculator. With the tool, one can compare different rates by banks and tally them to check whether the monthly instalments are affordable or not.

Once the bank is finalised, customers can proceed with either online or offline application submission. Prepare the documents that need to be submitted. Apply for loan foreclosure from the existing lender and prepare the new loan agreement with the new lender.

Frequently Asked Questions

Can a loan against property be transferred?

Customers of a loan against a property scheme can transfer their outstanding balance to an alternative lender with improved policies, including lower interest rates, flexible tenures, the absence of prepayment penalties, etc.

Which bank is best for a loan against property?

With an array of banks offering loans against property, customers ideally should invest their time in narrowing down their bank choice. With the average interest rate for loans against property being 9% to 10%, some banks offer lower rates, such as SBI, IDFC bank, Axis bank, etc.

What is a balance transfer in a mortgage?

Balance transfer in a mortgage means the borrower is switching their lender to an alternative lender with a reduced interest rate and EMI. The outstanding balance will be repaid to the new lender under revised terms. Moreover, the customers retain the home equity they have paid for.

Who can avail of a Balance transfer loan?

Anyone citizen of India with at least 12 EMIs left of their existing loan against property can apply. Moreover, they should have a good credit score and repayment history for banks to consider their case.

Do I get tax benefits on a balance transfer loan?

Customers have the provision to get tax benefits on loans against property balance transfers if they have also applied for a top-up credit facility. The tax benefits can be claimed under section 24B of the income tax act.

Vimal Vijayan is a major in Philosophy with a background in Music, Artistry, Research, and Teaching. More often than not, he is as confused as a cow on an astroturf but oddly that's just his strategy for staying lazy. Also, he likes to play Chess. Fin.

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