How does prepayment work for LAP?

Most loan providers allow partial or full prepayment of your outstanding loan against property (LAP) amount before completion of the repayment tenure. Each lending institute has its own prepayment policies in terms of applicable charges, minimum lump sum amount to be repaid, total prepayment transactions allowed per year, etc.

Typically, financial institutions charge prepayment penalties of a specific % of the principal prepaid if done within a particular tenure of availing the LAP. Some may restrict full loan closure within the initial years or not permit part-prepayments below specified limits, say, ₹5 lakhs.

Beyond specified lock-in periods, most loan providers allow foreclosure without prepayment penalties. Opting for longer tenure LAPs as per your requirements can avoid prepayment charges if you have surplus funds for early repayments in the future. Always check prevailing prepayment norms before signing your LAP agreement to avoid surprises. Seeking loan foreclosure should also follow stipulated application submission protocols set by your loan provider.