What is a loan against property balance transfer?

A Loan against Property (LAP) balance transfer is when an applicant transfers their existing loan against property from one Non-Banking Financial Company (NBFC), bank or loan provider to another. This is usually done to benefit from better terms such as lower interest rates, more flexible repayment options, or additional features offered by the new lending institution.

During a balance transfer, the new loan provider pays off the outstanding loan amount with the existing NBFC and takes over the property as collateral. The applicant then continues repaying the loan to the new loan provider as per the revised terms and conditions. This process can also include an option to avail of a top-up loan, depending on the applicant’s eligibility and the property’s value.

The balance transfer process typically involves certain steps, including the submission of necessary documents like identity proof, address proof, property documents, the existing loan statement, and income proof. The new financial institution may also conduct a property valuation and review the applicant's repayment history before approving the transfer.

Applicants should carefully evaluate the new loan's terms, including processing fees, foreclosure charges on the existing loan, and any additional costs involved in the transfer process.