The What, Why, and How of Loan Against Property Balance Transfer

Loans against property or property loans are becoming increasingly popular these days. These are loans that a borrower avails of against collateral, which is a residential or commercial property or a piece of land. The tenor on property loans can go up to 18 to 20 years and thus, one must try and avail oneself of a property loan at the lowest interest rate possible for even a minor difference in the loan against property interest rate can help a borrower save a considerable amount in the total interest outgo over the tenor of the loan. Currently, loans against property interest rates start from 8.50% per annum. However, lenders play smart and do not always give borrowers the rate of interest they deserve. If you are repaying your loan against property at a rate of interest higher than you think you deserve, apply for a loan against property balance transfer. Loan against property balance transfer refers to the process of transferring one's remaining loan from one's current lender to another offering better loan terms and conditions. The new lender pays off the old one and once this is done, the borrower's EMI obligation is towards their new lender. Here are some of the reasons why borrowers choose to transfer their loan to another lender:

1. Another lender is willing to offer the borrower a lower interest rate.

2. The borrower wants to avail themselves of a top-up loan. When borrowers choose to transfer their loan, they are given the option of availing of a top-up loan. This top-up loan draws a low rate of interest and approval comes easy for these loans.

3. The borrowers want to change their loan tenor or interest rate regime.

4. The borrower wants to switch to a lender known for better service.

Now that we know about the what and why of a loan against property balance transfer, let us move to its how.

1. If you decide to transfer your loan against property to another lender, the first thing you must do is inform your current lender of your intention to do so. You could inform your current lender by writing them a letter or filling out a form.

2. If your current lender receives and approves your request, they will release an NOC stating that they do not have any problems with you transferring your loan to another lender.

3. Along with the NOC, you will now apply to your new lender. Please note that your new lender will treat your loan against the property balance transfer application as a new application and you will be approved only if you meet all of your current lender's eligibility requirements. So, check before initiating the application process and move ahead with the process only if you meet the requirements.

4. Once your new lender approves your loan against the property application, they will pay off your current lender and then your EMI obligation would be to your new lender.

A loan against property transfer can prove to be highly beneficial if availed of at the right time and one can secure a major difference in one's current loan against property interest rate and the one being offered to them. Research and negotiations can help in this regard.

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