How to foreclose your home loan

Foreclose your home loan without paying an additional fee or a penalty. Follow a few simple steps.
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Home Loan
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5 minutes
01 April 2024

Home loan foreclosure refers to the prepayment of your outstanding home loan amount either in part or full before the loan's original tenure. It helps you become debt-free and save on the interest component that would have accrued over the remaining loan period.

Different ways to foreclose your home loan

There are two ways to foreclose home loans:

  1. Full prepayment
    This option lets you pay off the entire outstanding loan amount in one go. It is usually done when you have a lump sum amount available or decide to use your savings to clear the debt.
  2. Partial prepayment
    With this option, you pay off a part of the outstanding loan amount before the tenure ends. It helps in reducing the loan burden and subsequently, the monthly EMIs.

Steps to foreclose your home loan

  1. Check the foreclosure clause: Before proceeding with the foreclosure, carefully review your loan agreement or contact Bajaj Housing Finance Limited to understand the terms and conditions related to foreclosure. You must check for the lock-in period during which foreclosure is not allowed.
  2. Arrange funds: Assess your finances to ensure you have enough funds to repay the outstanding loan amount. For full prepayment, you will need the total outstanding amount, while for partial prepayment, calculate the amount you wish to repay.
  3. Inform us: Once you are ready to foreclose, inform us about your decision. Our experts will guide you through the process and provide the necessary documents.
  4. Pay the outstanding amount: On the agreed-upon date, make the payment for the outstanding loan amount through a cheque, online transfer, or demand draft, as instructed.
  5. Obtain No Objection Certificate (NOC): After the payment, request an NOC from the lender as proof that the loan has been fully or partially repaid. The NOC is essential for any legal formalities and for updating records with the local registrar of properties.
  6. Update records: Ensure that your loan closure status is updated with the credit bureaus and so is your CIBIL Score.

Foreclosing your home loan in India is a prudent financial decision that offers numerous advantages. It not only saves you from the interest burden but also brings a sense of financial security. However, before proceeding with the foreclosure, ensure you understand the terms and conditions associated with it, such as foreclosure charges or lock-in periods.

Disclaimer

While care is taken to update the information, products, and services included in or available on our application, website and related platforms, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions.

*Terms and conditions apply

Frequently asked questions

What is home loan foreclosure?

Home loan foreclosure refers to the process of repaying the outstanding principal amount and any pending interest on a home loan before the completion of the loan tenure.

Can I foreclose my home loan partially?

Yes, borrowers have the option to make partial prepayments towards their home loan, reducing the outstanding principal amount and overall loan burden.

Are there charges for foreclosing a home loan?

Yes, lenders typically charge foreclosure fees. These charges vary among lenders, and it is important to understand them before deciding to foreclose the loan.

Is there a lock-in period for home loan foreclosure?

Yes, many lenders impose a lock-in period during which borrowers cannot foreclose their home loans. It's crucial to be aware of this period to avoid unexpected charges.

How does home loan foreclosure impact my credit score?

Foreclosure itself does not necessarily have a negative impact on the credit score. However, how responsibly it is done matters. Clearing all dues and settling the loan responsibly may not significantly affect the credit score.

Can I foreclose my home loan at any time?

While you can foreclose your home loan, some lenders may have specific conditions or a minimum loan tenure before allowing foreclosure. Check with your lender for details.

Are there tax implications of home loan foreclosure?

Yes, there may be tax implications, especially if you were claiming deductions on the interest paid. Consult with a tax advisor to understand the impact of foreclosure on your tax benefits.

How do I inform my lender about my intention to foreclose the home loan?

Contact your lender's customer service or visit the nearest branch to inform them of your decision to foreclose the home loan. They will guide you through the process.

What documentation do I need for the home loan foreclosure process?

Generally, you will need to provide identification documents, loan account details, and proof of funds for the foreclosure. Your lender will guide you on the specific documentation required.

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