Jun 15, 2023Home Ally

Mortgage Portability in India: Transferring Loans to a New Property

by Godrej Properties Limited

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Introduction to Mortgage Portability

What is mortgage portability?

Mortgage portability is a facility provided by lenders that enables borrowers to transfer their existing home loan to a new property without the need to repay the loan in full and apply for a new loan. 

Advantages of mortgage portability

Cost-effective: Mortgage portability eliminates the need for prepayment charges and processing fees associated with closing an existing loan and availing a new one. 

Retention of favourable terms: By transferring the existing loan to a new property, borrowers can retain their favourable interest rate, loan tenure, and other terms negotiated during the initial loan agreement.

Convenience: Mortgage portability simplifies the process of purchasing a new property, as borrowers do not have to go through the hassle of applying for a new loan, undergoing fresh documentation, and fulfilling eligibility criteria again.

Timesaving: Transferring an existing loan to a new property can save considerable time compared to the process of applying for a new loan. It reduces the documentation and verification procedures, leading to a faster loan approval process.

Process of mortgage portability

Eligibility check: Contact your existing lender to determine if your loan is eligible for portability. Factors such as the age of the loan, repayment track record, and outstanding loan amount will be considered.

Evaluation of the new property: The new property will be evaluated by the lender to ensure it meets their eligibility criteria. This includes factors such as the property's value, legal clearances, and marketability.

Loan transfer agreement: If both the existing loan and the new property meet the lender's requirements, a loan transfer agreement will be executed.

Documentation: The borrower will need to provide necessary documents related to the new property, such as the sale deed, title deed, and other legal documents. The existing loan documents and repayment history may also be required.

Loan adjustment: The lender will adjust the outstanding loan amount, interest rate, and loan tenure based on the new property's value and the borrower's repayment capacity. The borrower needs to pay a processing fee for the loan transfer.

Loan approval: Once the documentation and loan adjustment process is completed, the lender will review the application and approve the loan transfer.

Repayment continuity: After the loan transfer, borrowers will continue repaying the loan as per the existing terms and schedule. The EMI amount and frequency will remain unchanged.

Conclusion

Mortgage portability offers a convenient and cost-effective solution for borrowers who wish to purchase a new property while retaining their existing home loan. By transferring the loan, borrowers can avoid the complexities and costs associated with closing an old loan and availing a new one. 
 

Frequently Asked Questions

1. Can I transfer a home loan with a co-applicant to a new property?

Ans: Home loans with co-applicants can be transferred to a new property through mortgage portability. 

2. Is it mandatory to transfer my home loan to a new property through mortgage portability?

Ans: Mortgage portability is an optional facility provided by lenders.

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