A Loan Against Property (LAP) balance transfer allows borrowers to shift their existing property loan from one lender to another. The goal is usually to reduce interest rates, improve repayment terms, or access better services.
While balance transfers can save money in the long run, it’s important to understand the associated fees and charges to ensure the move is financially beneficial.
Common Fees and Charges in LAP Balance Transfer
1. Processing Fees
Lenders often charge a processing fee for sanctioning the balance transfer.
Usually 0.25%–2% of the outstanding loan amount.
Some banks may offer fee waivers during promotional periods.
2. Prepayment or Foreclosure Charges
Your current lender may levy a prepayment fee to close the existing loan.
Typically 1%–2% of the outstanding principal, though it can vary.
Important to confirm foreclosure rules before initiating the transfer.
3. Legal and Documentation Charges
Includes stamp duty, legal verification, and documentation fees.
Ensures the property ownership and lien transfer to the new lender.
Usually a nominal percentage of the loan or fixed fee.
4. Valuation Charges
The new lender may re-evaluate your property before approving the transfer.
Fees for property inspection and valuation are usually borne by the borrower.
5. Miscellaneous Charges
May include processing courier charges, administrative fees, or other nominal costs.
These vary depending on lender policies.
Steps to Evaluate LAP Balance Transfer Costs
Calculate Total Fees
Include processing, foreclosure, legal, and valuation charges.
Compare Interest Rates
Check if lower rates with the new lender outweigh the transfer costs.
Assess Loan Tenure
Longer tenure may reduce EMIs but increase total interest paid.
Read Fine Print
Confirm prepayment clauses, hidden fees, and eligibility criteria.
Decide If Transfer Is Beneficial
Only proceed if savings from lower interest exceed total costs.
Benefits of LAP Balance Transfer
Lower Interest Rates: Reduce monthly EMIs and total interest.
Flexible Tenure: Some lenders offer longer repayment periods.
Improved Services: Better customer support or online facilities.
Top-Up Loan Option: Some lenders provide additional funds during balance transfer.
FAQs:
Q1. What is a LAP balance transfer?
It’s the process of moving an existing loan against property from one lender to another to benefit from better terms or lower interest.
Q2. Are there fees for balance transfer?
Yes, including processing fees, prepayment/foreclosure charges, legal/documentation fees, and property valuation charges.
Q3. How much can I save by transferring LAP?
Savings depend on the interest rate difference and loan tenure. Calculate total fees versus potential interest reduction.
Q4. Can I get a top-up loan during the transfer?
Yes, many lenders allow additional borrowing on the property while transferring the existing loan.
Q5. How long does LAP balance transfer take?
Typically 2–4 weeks, depending on documentation, property verification, and lender processing time.
Published on : 1st October
Published by : SMITA
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