It means transferring the existing loan from one bank to another bank . Most bank charges 2 to 3% as foreclosure penalty ,but still in many cases after paying this penalty its beneficial to transfer the loan.
Common Reason for balance transfer are :
Better rate of Interest: This is the main reason for a borrower to opt for a balance transfer of its existing loan.
Top-up Loan: Second biggest reason for balance transfer is requirement of additional funds over and above the existing loan. This is common in cases where a top-up loan has been refused by the existing bank.
Product features :
Max Top up - 60% of market value of property which includes existing loan amount.
Tenure – 1 to 15 years
Interest rate – As applicable . Interest rate keeps on changing .
Age limit - max 65 years for salaried or retirement age whichever is earlier and 70 years for self employed.
Loan foreclosure penalty - Means paying off the complete loan at one go. Most bank charges 2 to 3% of principal outstanding
Income tax benefit - principal repayment upto 1 lac under section 80(c) and interest repayment upto 1.5 lacs under sec 24.
Co-applicant - Most of the banks ask for co-applicant .
Co-applicant in case of
Individual - spouse,parents
Director - spouse , parents , pvt ltd company , other directors .
Partner - spouse , parents , other partners .
Co-owners of property need to be co-applicants in loan .
3 documents are required for a loan to get disburse
Sanction letter: - Loan sanctioning is based on the financial documents,personal documents and past credit history of the borrower. Based on the information provided banks calculates the loan eligibility and decides on the loan amount.
Legal report: - In this complete chain of property documents , starting from allotment of the property till the last transaction , are required . Based on these documents legal report is made.
Technical report : - In this approved map by municipal authority is required .On map provided , physical verification of the property happens .While verification certain things are checked like area of property , usage of property(Residential or commercial) .
If all the 3 documents are approved by the bank , than disbursement documents are signed and cheaque is made in name of existing bank.This complete process takes 15 to 18 days , subject to complete documents are provided by borrower