What is Home Loan Foreclosure?-Banner_WC
What is Home Loan Foreclosure _WC
Home Loan foreclosure refers to the prepayment of the pending Home Loan amount in one go, effectively closing your loan ahead of time. Home Loan repayment, prepayment/part-prepayment, and foreclosure refer to different repayment scenarios, as detailed below.
- Normally, Home Loan repayment is carried out in EMI payments through the course of your repayment tenor
- Home Loan part-prepayment refers to a scenario when you have surplus funds and would like to repay a substantial sum in advance
- Home Loan foreclosure refers to when you have sufficient surplus funds to repay the entire outstanding amount on your Home Loan in one go, before the end of the tenor
Many borrowers choose to foreclose their Home Loans if they have the funds handy and would like to avoid accumulating more Home Loan interest through the rest of their repayment tenor. It not only frees up your repayment capacity but makes you debt-free earlier than you may have anticipated.
Most importantly, if you are an individual borrower with a floating interest rate, you don’t have to bear any additional costs or penalties on foreclosing your housing loan.
If you are confused about foreclosing your Home Loan, here are some aspects you can consider, making the decision easier for you:
- Weigh the tax benefits you may lose out on once you stop your Home Loan EMI payments
- Calculate whether your finances can take the sudden fund deficit caused by foreclosing your Home Loan balance in one go
- Assess your ongoing financial obligations and future goals, and consider foreclosing your loan if you have the funds and would like to reallocate your repayment capacity to a different investmen
Once you have arrived at the decision to foreclose your ongoing Home Loan, here are the necessary steps to follow, so you can close your loan seamlessly:
Address a letter to the lender stating your intent to foreclose your ongoing Home Loan.
Once your foreclosure application is accepted, you will be notified of your outstanding Home Loan balance. It includes your remaining Home Loan amount and foreclosure penalties (if applicable).
After receiving your outstanding dues, the lender will proceed to release all your documents in their possession, such as your Title Deed and other property-related documents.
Ensure that you collect a No Objection Certificate and a Home Loan foreclosure letter, confirming that your loan has been diligently repaid. Bajaj Housing Finance issues the foreclosure letter 21 days after the foreclosure request.
You can use our Home Loan Foreclosure Calculator to give you a better idea of the amount you stand to save if you foreclose your Home Loan on the terms you prefer. The tool is available online and is free to use for everybody.
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