A loan against property is a great way to finance sudden lump sum expenditures when you do not have the funds to do so, but own a property that can be leveraged to get the funds. Here any property, be it residential or commercial, can be pledged to avail loan against it. The borrower’s loan eligibility, CIBIL score, and property conditions are some key points that the lenders factor in while deciding the rate of interest for such loans. However, if the applicant is already availing a loan against property and is not happy with the interest rate and services of the lender, then they can opt for a property loan balance transfer. Balance transfer of loan against property is a process where a borrower can transfer his existing loan amount to another financial institute/ lender to avail better features and terms.

Pros of Balance Transfer of Loan Against Property

Avail Affordable Interest Rates 

A balance transfer of loan against property can help borrowers to avail lower interest rates on their existing loans making EMIs payments affordable.

Longer Loan Repayment Tenor

Opting for a loan against property balance transfer gives borrowers the opportunity to extend loan repayment tenor of up to 15 years making it easier and more comfortable for the borrower to repay!

Availability of Top-up Loan 

Often top-up loans are available on balance transfer of loan against property, which adds to its attraction and helps borrowers to have more funds. 

Zero Foreclosure Charges

An added advantage of balance transfer of loan against property is that the borrowers opting for floating interest rate on property loan need not pay any additional foreclosure penalty/charges, in case of part prepayment of the loan amount. 

Low Processing Fee 

A balance transfer of loan against property often requires minimum documentation, a low processing fee, and gets speedy approval form the lender. 

Cons of Balance Transfer of Loan Against Property

Transfer Fees

A balance transfer of a loan against property may require payment of fees for it which may ultimately outweigh the interest you are trying to save by transferring the loan. So, one must weigh the benefits of transferring the loan before doing so.

Documentation Process Wastes Time 

The whole documentation process if you opt for a balance transfer may be just a waste of time and energy which could have been saved had you negotiated with your old lender for better interest rates.

Could Make You Fall for Deeper Debt

By enticing you through lower interest rates and top-up loans, the lenders could make you fall into deeper debt trap, repayment of which may become more difficult.

Final Words

A balance transfer is a good idea if you have already planned a clear strategy for the repayment of the loan. But, without proper planning one must not opt for a balance transfer of loan against property as defaulting could lead to property loss. So, while you may enjoy the pros of balance transfer of loan against property, keep in mind the cons too, for a comfortable loan journey.