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What is Home Loan Foreclosure?

Home Loans empower aspiring homebuyers to buy their homes without breaking the bank to arrange for the required funds. While Home Loan prevents immediate liquidity, they come at the cost that needs to be paid back to the lending institution, above the principal amount borrowed as Home Loan interest.

Home Loan foreclosure refers to the full prepayment of the Home Loan balance in one go, thereby closing your loan before the end of the repayment tenor.

You may consider foreclosing your loan if you have an amount available to save on your interest outgo. It allows you to take on new investments or even a second Home Loan.

Here are certain aspects to bear in mind before you initiate your Home Loan foreclosure:

  • Take stock of your current financial status to see if it can sustain the loss of such significant funds that will go into paying your Home Loan balance
  • Consider what stage of your repayment tenor you are foreclosing your loan at because if you are already at the tail-end of the tenor, it makes little sense to prepay at one go
  • Account for the Home Loan tax benefits you will miss out on

Home Loan Foreclosure: Charges and Fees

Home Loan Foreclosure: Charges and Fees

Not only does Home Loan foreclosure save you a substantial portion of your Home Loan interest, but individual borrowers with floating rate Home Loans can also do so at zero additional costs.

However, entities or individuals with a fixed interest Home Loan must pay an additional fee upon foreclosing their Home Loans, which can range up to 4%*.

Features of Home Loan Foreclosure Calculator_WC

Features of Home Loan Foreclosure Calculator

The Home Loan Foreclosure Calculator allows you to assess your savings you stand to make, keeping your current repayment conditions on your ongoing Home Loans in mind.

Borrowers must fill in the following details:

  • The total Home Loan principal amount
  • The current Home Loan interest rate
  • Your repayment tenor
  • The number of EMI payments made to date

The calculator then provides you with the total foreclosure amount and the amount you can possibly save as Home Loan interest.

The Housing Loan Foreclosure Calculator prevents you from taking hasty prepayment decisions, allowing you an insight into the repercussions of foreclosing your Housing Loan. What’s more, you no longer have to rely on guesswork or manual calculations, as the calculator provides you with instant results based on the information submitted.

Home Loan Foreclosure Process: Step by Step

Home Loan Foreclosure Process: Step by Step

The following steps are usually involved when the borrower chooses to foreclose their Home Loan.

Step 1: Contacting the Lender

Before you proceed to initiate the foreclosure, borrowers are advised to contact with their lenders and understand the right steps.

Step 2: Foreclosure Application

A written application citing the loan reference number and other details should be submitted to the lender so that they can draw up the necessary paperwork for the foreclosure.

Step 3: Complete Payment

Upon receiving confirmation from your lender, you can finish repaying your outstanding Home Loan balance and notify your lender of the same.

Step 4: Receipt of Foreclosure

After receiving your outstanding dues, the lender will release all your documents in their possession, such as your Title Deed and other property-related documents.

Borrowers should ensure that they also receive a NOC and a Home Loan foreclosure letter, confirming that no more dues remain.

Bajaj Housing Finance issues the foreclosure letter 21 days after the foreclosure request.

*Terms and conditions apply

Frequently Asked Questions

Home Loan Foreclosure Calculator: FAQs

Most lenders allow loan foreclosure after a certain period of time, such as six to twelve months of consistent EMI payments.

Foreclosing your Home Loan can have a positive impact on your credit score, provided you have made timely EMI payments and cleared all outstanding dues. Also, when you foreclose a loan, the lender updates the status as ‘closed’ which positively impacts your credit report.

Individual borrowers with floating interest rate Home Loans can also foreclose their loan at zero additional costs. However, entities or individuals with a fixed interest Home Loan will have to pay an additional fee upon foreclosing their Home Loans, which can range up to 4%*.

Your application can be turned down if you don't follow the lender's prepayment terms and conditions.

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