Home Loan Foreclosure: Overview
Home Loans empower aspiring home buyers to buy their homes without breaking the bank to arrange for the required funds. While Home Loans prevent 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.
Many Home Loan borrowers consider foreclosing their loans if they have an amount available to save on their interest outgo. It allows them 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
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
The Home Loan Foreclosure Calculator allows borrowers to assess the savings they stand to make, with the current repayment conditions on their ongoing Home Loans in mind.
Borrowers must fill in the following details:
- The total Home Loan principal amount
- The current Home Loan interest rate
- Their 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 Home Loan Foreclosure Calculator prevents you from taking hasty prepayment decisions, allowing you an insight into the repercussions of foreclosing your Home 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.
Steps For Home Loan Foreclosure
The following steps are usually involved when the borrower chooses to foreclose their Home Loan.
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Contacting the Lender
Before you proceed to initiate the foreclosure, borrowers are advised to contact with their lenders and understand the right steps.
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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.
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Complete Payment
Upon receiving confirmation from your lender, you can finish repaying your outstanding Home Loan balance and notify your lender of the same.
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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 No Objection Certificate 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
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