What is Loan Foreclosure?
Loan foreclosure refers to prepayment of the pending loan amount in full before the end of the repayment tenor. When you foreclose your Loan Against Property, it means that you have no more pending dues with the lender and can be declared debt-free in the loan statement. When you choose to foreclose your Loan Against Property, here are the benefits you gain:
- By foreclosing your loan earlier, you save the interest that would otherwise accumulate through the course of the remaining repayment tenor.
- You can enjoy a freer repayment bandwidth and take on other investments of loans, to serve financial goals.
How Can You Ensure a Successful Loan Against Property Foreclosure?
Here are a couple of things you should bear in mind before you consider foreclosing your Loan Against Property for good.
- Tax Implications: While Loans Against Property aren’t eligible for too many tax exemptions, one can still qualify if the end-use of the loan sanction is to buy a property. When you foreclose your ongoing loan, consider what you may lose out on in terms of tax concessions.
- Financial Implications: Before you initiate the Loan Against Property foreclosure, ensure that you have the funds handy, depending on the amount you have to pay to foreclose the loan. If you are falling short, consider deferring the plan till the time you can arrange for the funds.
*Terms and conditions apply.
Frequently Asked Questions
Before applying for a loan foreclosure, here are the factors to consider:
- Adequate cash supply
- Current tax concessions
- Additional charges, such as foreclosure penalties
The act of foreclosing a Loan Against Property means that you pay the outstanding loan amount in one go before the end of the repayment tenor. If your tenor was previously 17 years, and you foreclose your loan in the 10th year itself, you save the interest that would have accumulated through the other 8 years.
The foreclosure month is the same month in which you repay the entire Loan Against Property balance to the lender before the end of your repayment tenor.
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