Loans against property have become quite popular these days. Several different reasons are responsible for the growing popularity of these loans. To start with, loans against property are secured loans and therefore, attract a low rate of interest. The low rate of interest on these loans helps keep EMIs affordable and the total interest payout on the lower side. Further, loans against property funds come with zero end-use restrictions. Borrowers can use the money as they like. Lastly, property loans allow borrowers to unlock the value locked in their property.

All individuals planning to apply for a loan against property try their best to avail of the loan on the lowest property loan interest rates. However, sometimes, people need money urgently and therefore, accept whatever loan terms and conditions their lender is offering them. If you are someone who is repaying a loan against property at an interest rate much higher than what is the market norm, you can benefit from a loan against a property balance transfer.

Loan against property balance transfer is a facility that most lenders offer these days. Using this facility, borrowers can transfer the remaining loan amount to another lender willing to offer them a better or lower interest rate. A lower interest rate not only reduces the cost of borrowing the loan but also eases the burden of loan repayment by helping one reduce their loan EMIs.  

Until a few years ago, borrowers had to pay a penalty to foreclose their loan account. However, these days, individual borrowers on floating interest rates can foreclose their loan account at any time without paying any penalty. Borrowers on fixed interest rates are charged a penalty. In most cases, lenders charge 3% to 5% of the principal value as a penalty for foreclosure.  

Borrowers planning to apply for a loan against property balance transfer must keep in mind that lenders treat all balance transfer applications as new loan applications. Thus, your lender will approve your loan against your property balance transfer application only if you meet their qualifying criteria. Further, all lenders also charge a loan against property balance transfer fee. Lenders charge this fee as a percentage of the total loan amount and in most cases, this fee varies between .25% to 2% of the loan amount. Since loans against property involve a hefty principal amount, the loan against property balance transfer fee inevitably turns out to be a hefty amount.

Borrowers must opt for a loan against property balance transfer only if the savings facilitated by a lower interest rate are high enough to cover the cost of the transfer as well as help the borrower save some money in the long run. If you are unsure whether a loan against property would be the right choice for you, you can use a loan against property balance transfer calculator to help you weigh the pros and cons of your decisions. These calculators are easily available on the internet, they are easy to use and one need not pay any fee to use these calculators. So, if you are planning to apply for a property loan balance transfer, use a balance transfer calculator to help you make the decision that’s right for you.

Also have a look at How to Maximise Your Savings With A Property Loan Balance Transfer