When Banks and HFCs are NOT allowed to charge prepayment penalty: If it’s a dual-rate loan, where the home loan interest rate is fixed initially, Banks can levy a prepayment charge if the prepayment is made under a fixed-rate loan.HFCs can charge prepayment penalty on fixed-rate loans, if the borrower is taking another loan from another bank or HFC to make the prepayment. ![]() Banks can charge prepayment penalty in case of fixed-rate loans.If you are a non-individual borrower, Banks and HFCs are allowed to charge prepayment penalty. ![]() When Banks and HFCs are allowed to charge prepayment penalty: When it comes to home loan prepayment, the central bank has created some guidelines for banks and housing finance companies (HFCs). Also, you can easily withdraw your money from the current account whenever you want. Therefore, the bank will calculate your interest after deducting the balance in your current account (if any) from the outstanding principal amount. Such loans like SBI MaxGain allow you to deposit your extra savings in a current account which is linked to your home loan account. But, at the same time, it also takes all your savings away which could be a problem during any financial emergency. Making prepayment surely reduces your interest burden. If allowed, you should also check if your bank is imposing any penalty for loan prepayment. That’s why it’s important to check the prepayment clause before you sign your home loan agreement. There are some lenders that do not allow prepayment as it may cause losses to them. Eligiblilty for Home Loan PrepaymentĪny individual can make full or partial prepayment against their outstanding loan, as long as the lender allows it. ![]() Once you enter these details, just click “Calculate” to view your interest savings from loan prepayment. All you need to do is enter a few details of the loan, including: The home loan prepayment calculator helps you determine how much you can save from prepayment. How does Home Loan Prepayment Calculator work?
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