Owning a Home or Property is the most predominant dream and goal of any middle class or salaried people;
But due to long tenure of repayment of home loans & high interest amounts, many individuals don't want to wrongly commit & make unnecessary decision
In relief to existing home loan borrowers & those willing to become home loan borrowers, RBI has announced abolishment of
prepayment penalty charges on foreclosure of home loans for floating interest rates with immediate effect from 5th Jun 2012.
prepayment penalty charges on foreclosure of home loans for floating interest rates with immediate effect from 5th Jun 2012.
As told by RBI, this discontinuing of prepayment penalty charges will remove the discrimination between the existing loyal customers & new borrowers and this allowed the existing old borrowers to shift to the bank which provide lowest floating interest rate.
Most of the Banks have already following this scrap on penalty charges on floating rate home loans but still some banks are charging pre-closure penalty amount for the outstanding loan amount.
You can see the notification of RBI vide.RBI/2011-12/589 DBOD. No. Dir. BC.107/13.03.00/2011-12 regarding Home Loans-Levy of fore-closure charges/pre-payment penalty in the following link:
With reference to this RBI's directive, NHB, the Housing Finance Regulator of India (NHB-National Housing Bank) has already initiated to scrap Penalty Charges on pre-payment of housing loans on 9th Oct 2011 itself.
And all the Housing Finance Companies is following & abiding the directive of NHB.
FYI, State Bank of India (SBI) was the first bank to abide the directive on abolishing pre-payment penalty fees on floating home loan.
However, most banks still continue to charge the penalty on premature closure of fixed rate loans.
There is a expectation/ rumour that scrap / discontinue of Premature closure of home loan penalty charges for fixed rate home loans also will be considered / taken place in 2013.
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