If one is looking to reduce your overall interest payments on your Loan Against Property, they might just want to get their outstanding dues transferred to a different lender that is offering a lower interest rate. But, before making the switch, the borrower must take a look at the interest rates of the lender and the processing fees that they charge. This article will take the reader through every detail of a Loan Against Property Balance Transfer (LAPBT) facility.
LAP Balance Transfer Interest Rate and Processing Fees
The interest rates and processing fees charged by some of the major lending institutions for their Loan Against Property balance transfer facilities are as follows:
Lender |
Interest Rate (% per annum) |
Processing Fees |
Bajaj Housing Finance |
9.60% onwards |
0.40% of the loan amount |
PNB Housing Finance |
8.75% onwards |
1% of the loan amount |
ICICI Bank |
10.75% onwards |
(0.5% of the loan amount + 18% GST) + (Lower of ₹5,000 + 18% GST or 0.25% of the loan amount +18% GST) |
LIC Housing Finance |
9.25% |
1% of the loan amount, along with applicable taxes. |
Shubham Housing Finance |
15.00% |
|
Types of LAP Balance Transfer Interest Rates
The two types of Loan Against Property balance transfer interest rates are:
Fixed interest rate: This type of interest rate is calculated on the entirety of the loan amount and distributed equally over the number of EMIs that needs to be paid. It does not take into account the constant reduction of the outstanding principal as the borrower repays it through Equated Monthly Instalments (EMIs). This type of interest is easier to calculate as compared to the Reducing Balance interest rate.
Reducing balance interest rate: This type of interest rate is calculated on the overall outstanding principal of the loan amount. The total interest payable reduces with time as the loan is paid off through EMIs. Loans which are given with this type of interest rate are cheaper as compared to the ones given with fixed interest rates.
Factors affecting LAP Balance Transfer Interest Rates
Some of the factors that affect LAPBT interest rates are:
Income level: The monthly income of the borrower is an important factor that lenders consider while deciding on the interest rate for them. Borrowers with a higher income are generally considered to have a lower risk profile. This means that they can get such a loan at a lower interest rate.
Repayment history: The repayment history of the borrower is also a factor that is taken into consideration while deciding on the interest rate for them. If the borrower has exhibited a healthy repayment pattern in the past, they will also be considered to be someone with a low risk profile. This would eventually translate into a lower interest rate for them. On the other hand, if inconsistencies are spotted in the repayment history of the borrower, the lender can charge them a high interest .
Relationship with the bank: If the borrower has a savings account with the bank or has taken loans from them in the past, they can be given a lower interest rate. Additionally, if the borrower has taken loans from the bank in the past and repaid them on time, they can even negotiate the repayment terms with the institutions.
