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In Indonesia, many homeowners consider transferring their mortgage to a different bank to secure better financing terms.
One of the main reasons for this is to take advantage of lower interest rates, which can significantly reduce monthly repayments and long-term financial burdens. Additionally, promotional offers from other banks, such as waived administrative fees, reduced early repayment penalties, or more flexible loan tenures, often make switching an attractive option for borrowers.
This process is commonly referred to as a mortgage takeover. In this article, Lets Move Group will explore the concept of mortgage transfer, its benefits, the application process, and recommended banks that offer this facility.
What is a Mortgage Take over (KPR Take Over)?
A mortgage takeover is the process of transferring an existing home loan from one bank to another. Borrowers typically opt for this when they find a new lender offering better terms, such as lower interest rates, more flexible repayment periods, or additional mortgage benefits.
When is the Right Time to Switch Your Mortgage?
A mortgage takeover can be a strategic financial move to improve your home loan terms. But when is the right time to make the switch?
Generally, homeowners can consider a mortgage takeover after completing at least one year of repayments. By this point, the property's certificate is usually issued and held by the bank as collateral. The costs involved in transferring a mortgage typically range between 2% and 3% of the remaining principal loan balance.
It is crucial to ensure that the mortgage transfer is carried out through the proper legal procedures. Both the current borrower and the new lender must formalise the agreement through a notary to ensure the legality of the transaction. Additionally, the transfer must be reported to the bank so that the property certificate can be securely transferred to the new owner's name in compliance with banking regulations.
By following the correct procedures, a mortgage takeover can be an effective solution for homeowners looking to optimise their home financing structure.
Case Study
A homeowner currently has a mortgage with Bank A at an interest rate of 10% per annum with a 15-year tenure. After two years of repayments, they discover that Bank B is offering a mortgage with an 8% interest rate for the same tenure. The homeowner then decides to switch their mortgage to Bank B.
During this mortgage takeover process, the new bank (Bank B) will settle the outstanding mortgage balance with the current bank (Bank A). Subsequently, the borrower will take on a new mortgage with Bank B, benefiting from the lower interest rate and more favourable loan terms.
Types of Mortgage Takeovers in Indonesia: Benefits and Risks
There are several types of mortgage takeovers that can be tailored to suit your loan application goals and needs.
Inter-Bank Mortgage Takeover
- This type of mortgage takeover involves transferring a mortgage from one bank to another.
- The primary motivation is usually to secure a lower interest rate, a more flexible repayment period, or better mortgage features.
- The process includes a reassessment of the property by the new bank, approval from both the current and new banks, and completion of the required documentation.
- Benefits: Potential savings on interest costs and improved mortgage conditions.
- Risks: Additional costs such as revaluation fees, administrative fees, and the potential risk of rejection by the new bank.
Mortgage Takeover from Previous to New Borrower
- This occurs when a homeowner sells their property to a new buyer, who then continues the existing mortgage repayments.
- The process requires approval from the mortgage-providing bank, a change of borrower’s name in the mortgage agreement, and completion of legal documentation for ownership transfer.
- Benefits: A relatively faster process compared to applying for a new mortgage and the potential to secure a property at a better price.
- Risks: Possible legal issues if the transfer is not conducted correctly and the risk of non-payment by the new borrower.
Unofficial Mortgage Takeover
- This type of takeover occurs without involving the mortgage-providing bank.
- It is typically based on a written agreement between the existing and new borrower but is not recorded with the bank.
- This approach carries significant risks, as it lacks strong legal standing and could lead to future disputes.
- Risks: Serious legal complications, the risk of losing the property, and the possibility of non-payment by the new borrower.
Differences Between Credit Takeover and Mortgage Takeover
Credit Takeover and Mortgage Takeover are two distinct processes.
In a credit takeover, a homeowner who still has an active mortgage sells their property to another party. The buyer takes over the ongoing mortgage repayments, often by paying a deposit to the seller.
Meanwhile, a mortgage takeover refers to transferring mortgage financing from one bank to another under the supervision of the bank, following applicable regulations. The homeowner remains the same, but the mortgage provider changes. The main purpose of a mortgage takeover is to obtain a lower interest rate, a longer loan tenure, or more favourable terms from the new bank.
How to Process a Mortgage Takeover
Just like a standard mortgage application, a mortgage takeover requires a formal agreement. This document ensures that all involved parties—homeowner, buyer, and bank—have a clear understanding and can avoid potential future losses.
If you are considering a mortgage takeover, here are the steps to follow:
1. Research Banks Offering Mortgage Takeover Services
The first step is to identify banks that provide mortgage takeover facilities with terms that match your needs. As a prospective buyer, it is advisable to visit the selected bank with the homeowner or seller to gain comprehensive information about the applicable procedures.
2. Prepare Complete Documentation
Once you have selected a bank, the next step is to gather the required documents. Before submitting them, it is crucial to verify the legitimacy of the seller’s property ownership documents. Ensure there are no legal disputes or administrative issues that could cause future problems.
3. Property Revaluation
The bank handling the mortgage takeover will conduct a reappraisal or reassessment of the property’s value. This process determines the market value of the property, the remaining loan balance, and the outstanding mortgage payments to be covered by the buyer.
4. Issuance of Sale and Purchase Binding Agreement
To ensure a secure transaction, both the buyer and homeowner must create a Sale and Purchase Binding Agreement (AJB), which legally regulates the transfer of property rights. Additionally, issuing a power of attorney is recommended to ensure that the remaining mortgage balance can be settled safely and to facilitate the retrieval of ownership certificates once the mortgage is fully repaid.
Furthermore, the seller should issue an official notification to the bank regarding the transfer of property rights. This step ensures a smooth process without administrative obstacles.
Costs Involved in a Takeover Loan
A mortgage takeover can be a smart financial move to secure a lower interest rate or better loan terms. However, before proceeding with this process, it’s crucial to understand the associated costs.
Early Repayment Fee
Your current bank may charge a penalty if you repay your mortgage earlier than the agreed loan term. This penalty typically ranges between 1% and 3% of the remaining loan balance, depending on the bank’s policies.
Administration and Processing Fees at the New Bank
When applying for a mortgage with a new bank, you’ll need to cover administration and processing fees. These generally include a processing fee of around 0.5% – 1% of the total loan amount, while administrative costs vary depending on the bank’s terms.
Notary Fees
The mortgage takeover process requires the services of a notary to handle security agreements, credit contracts, and, if needed, title transfer documents. Notary fees typically range from IDR 3 million to IDR 10 million, depending on the complexity of the documentation.
Property Appraisal Fee
Before transferring a mortgage, the new bank will conduct a property appraisal to reassess the value of the asset being used as collateral. Appraisal costs generally range from IDR 1.5 million to IDR 5 million, depending on the property’s location and value.
Insurance Costs
As part of the mortgage takeover, the new bank may require the homeowner to obtain life insurance and property insurance. The cost of these policies varies based on the loan amount and the borrower’s age.
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Requirements for Applying for a Mortgage Takeover
When applying for a mortgage takeover, both the existing borrower and the new borrower (if applicable) must prepare key documents. These documents are essential to assess financial eligibility and ensure the legal standing of the property transfer. Below is a checklist of required documents:
Borrower Identification
- National Identity Card (KTP)
- Family Card (KK)
Financial Documents
- Tax Identification Number (NPWP)
- Latest payslips as proof of income
- Original bank account book showing the account number
Loan-Related Documents
- Copy of previous mortgage payment history
- Copy of the original mortgage agreement from the current bank
Property Documents
- Copy of the latest Land and Building Tax (PBB) receipt
- Copy of Building Permit (IMB)
- Copy of property ownership certificate with the bank’s official stamp as collateral proof
6 Banks That Offer Mortgage Takeovers in Indonesia
A mortgage takeover can be a great solution for homeowners looking to secure a lower interest rate, reduce monthly repayments, or access additional funds for other financial needs. Several banks in Indonesia offer mortgage takeover programmes with attractive benefits. Here are some of the top options to consider:
Bank Mandiri
Bank Mandiri provides a mortgage takeover programme with various benefits, including lower monthly repayments, additional credit limits for other financial needs, and flexible repayment terms of up to 20 years, offering greater financial flexibility for homeowners.
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Bank OCBC NISP
One of the key advantages of OCBC NISP’s mortgage takeover programme is its quick and straightforward application process. The bank offers interest rates starting from as low as 2.88% per annum, with a fixed rate for the first year. Additionally, customers are required to open a Taka savings account with a minimum tenure of one year.
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Bank BCA
As one of Indonesia’s largest private banks, BCA offers a mortgage takeover programme with no penalty fees. The application process can be completed online, making it a convenient and efficient option for homeowners looking to switch their mortgage to BCA.
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Bank Permata
Permata Bank offers a mortgage takeover facility with competitive interest rates and a simplified application process. This programme allows homeowners to transfer their mortgage from another bank with flexible requirements and an easy approval process.
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Maybank
For those seeking a higher credit limit, Maybank provides a mortgage takeover programme with loan amounts ranging from IDR 250 million to IDR 10 billion. Additionally, the loan tenure extends up to 20 years, allowing borrowers to manage their repayments according to their financial situation.
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Bank CIMB Niaga
CIMB Niaga offers a variety of mortgage programmes, including KPR Xtra, KPR Xtra Manfaat, and KPR Xtra Flexi iB, each tailored to meet different financial needs. These options provide customers with more flexibility in managing their home financing.
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Sharia Mortgage Takeover Options in Indonesia
For homeowners looking to switch to an Islamic mortgage scheme, several banks in Indonesia provide Sharia-compliant mortgage takeover options. These programmes allow borrowers to transfer their mortgage under Islamic principles while enjoying additional benefits. Below are some options to consider:
BSI Griya Take Over – Bank Syariah Indonesia (BSI)
BSI offers the BSI Griya Take Over programme, which allows homeowners to transfer their mortgage with lighter instalments, all structured under Sharia-compliant financing agreements.
KPR iB Hijrah – Bank Muamalat
The KPR iB Hijrah programme from Bank Muamalat is suitable for various needs, including home purchases, renovations, and mortgage takeovers from other banks, all within the framework of Islamic banking principles.
KPR iB – BCA Syariah
BCA Syariah provides the KPR iB product, which can be used for purchasing ready-stock houses, off-plan properties (for partner developers), and mortgage takeovers from other banks, ensuring Sharia compliance throughout the process.
Mega Syariah Flexi Home Benefit Plus – Bank Mega Syariah
Flexi Home Benefit Plus from Bank Mega Syariah offers a Sharia-compliant mortgage takeover with the option to top up financing if needed, providing flexibility for homeowners.
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