A distinctive feature of LAP is the flexibility to prepay the outstanding loan amount any time during the loan tenure. As per latest RBI guidelines, no prepayment charge is levied in case of individual borrowers, who have a floating rate of interest applicable on their loan against property. However, corporate entities are still charged a certain fee for prepayment, but it is minimal. Prepaying your loan amount helps to bring down the outstanding principal amount.
Benefits of Prepayment of Loan Against Property
Prepayment of the outstanding amount under Loan Against Property offers various benefits. Some of them are:
Reduced loan tenure:
Prepayment of the loan helps in reducing the outstanding amount. This feature can be utilised in reducing the loan tenure so that you can get over the liability as soon as possible.
Cost-saving on EMIs:
Once you have prepaid the loan, the amount to be repaid decreases, thus, the monthly instalments of the loan also go down
Reduced interest cost:
As part of loan prepayment, you pay the principal amount first, which ultimately reduces the interest amount. This helps to reduce the interest cost
Greater ease of loan repayment within stipulated tenure:
Repaying your loan borrowed against the property would become easier.