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Prepayment Charges abolished by RBI

by Manish Chauhan · 203 comments

This is a little old news. RBI has finally abolished Prepayment charges or penalty on home loans with floating interest rates. Borrowers can now transfer to new lender which provides them less interest rates without paying any kind of charges or penalty. Damodaran Committee on customer service in banks, RBI) has been observed that banks have been unfair in asking for charges when home loan borrowers want to switch to some other lender with lesser interest rates. Now if you prepay the loan from your own sources or through another lender, you only pay the outstanding loan amount.

Here are the excerpts from the circuler from RBI on abolistion of fore-closure charges/pre-payment penalty

2. In this context, attention is invited to paragraphs 81 to 83 of the Monetary Policy Statement 2012-13 announced on April 17, 2012 with regard to home loans on floating interest rates. The Committee on Customer Service in Banks (Chairman: M. Damodaran) had observed that foreclosure charges levied by banks on prepayment of home loans are resented upon by home loan borrowers across the board especially since banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario. As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.

3. The removal of foreclosure charges/prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans. Though many banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there is a need to ensure uniformity across the banking system. It has, therefore, been decided that banks will not be permitted to charge foreclosure charges/pre-payment penalties on home loans on floating interest rate basis, with immediate effect.

Prepayment Charges removal will help !

This new rule will surely be taken in good spirit by borrowers and end the discrimination done by banks between old and new customers. This will also make sure that the interest rates become more competitive in the overall system.

Have you prepaid your home loan just some time back with charges ? Are you going to prepay the loan soon after this Prepayment Charges removal ? What are your thoughts about this new circular !

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{ 203 comments… read them below or add one }

1 Nagarajan June 15, 2012 at 10:52 am

Hi Manish …

Good to hear :)

I have a plan to prepay my ICICI home loan. But I want to know ICICI implemented this rule or not ?

I am not receiving any communication regarding this from ICICI.

Thanks and Regards
Nagarajan Santhan

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2 Varun June 15, 2012 at 11:07 am

I have an ICICI Home loan i prepay almost on a monthly basis there is no charges.

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3 Manish Chauhan June 15, 2012 at 5:46 pm

Prepayment on monthly basis to some extent is not an issue !

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4 Jayaraman June 15, 2012 at 2:14 pm

ICICI and SBI were the first to implement this even before the circular was released.

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5 Manish Chauhan June 15, 2012 at 6:03 pm

This should be implemented by ICICI for sure … just remind them about this incase they disagree !

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6 Roop5 June 20, 2012 at 12:27 am

ICICI have this rule implemented currently for all floating loans , even if they were fixed rate at the time of loan disbursement.
for more details, pls go through last paragraph of prepayment charges on
http://www.icicibank.com/Personal-Banking/loans/home-loan/service-charges.html

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7 Manish Chauhan June 21, 2012 at 3:32 pm

Thanks for that update

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8 Mukesh June 15, 2012 at 11:25 am

Although very late, this move has finally taken shape. I ended up paying INR 24000 to foreclose my ICICI home loan in 2009.

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9 Manish Chauhan June 15, 2012 at 5:46 pm

Hmm… Yea now the future customers will atleast benefit from this

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10 Ankur June 15, 2012 at 12:11 pm

I availed home loan last month and also prepaid around 25% of the principal (made some frugal choices recently) just after 1st EMI. It has reduced my 180- months tenure to 99 months…I also chose to keep the EMI same to route a significant part of EMI towards prepayment. Now I hope to close this loan in 1 yr time!!!!!

Thanks to Manish for his excellent articles on home loan which has increased my awareness rightly!

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11 Ashish June 15, 2012 at 12:41 pm

Well done Ankur. A nice example of how pre-paying a loan in initial days can bring down the loan period amazingly.

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12 Manish Chauhan June 15, 2012 at 5:37 pm

Good to hear that .. prepayment can really be a big boon and you have shown that with your personal example

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13 Ankur June 15, 2012 at 8:48 pm

Thanks Manish. Would like to share with readers, for awareness, that HDFC has following clauses for prepayment:
1. You can can make only 1 prepayment in a month (although you can provide multiple cheques from different accounts).
2. The prepayment amount should be more than twice your EMI
3. You need to provide 6 months bank statement as a proof towards source of prepayment
4. There are absolutely no prepayment charges

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14 Manish Chauhan June 19, 2012 at 12:31 pm

Thakns for this update . Where did you get this from ?

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15 Ankur June 19, 2012 at 1:06 pm

When i visited HDFC for prepayment…these clauses were told to me by HDFC folks…

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16 Abhinav Gulechha June 15, 2012 at 12:17 pm

Hi Manish

Thanks. This is a welcome move for customers and put an end to the debate. However 2 points:

a) From the text of circular, its abolished for only floating rate loans. Thus, those under fixed rate loans stay put as per bank’s prevailing T&Cs
b) This is a circular by RBI to banks. What about loans taken from home finance companies like HDFC etc. – Has National Housing Bank come up with a similar very clear directive? Else I have noted that divergent practices followed by NBFCs will continue.

Abhinav

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17 Manish Chauhan June 15, 2012 at 5:44 pm

Yea .. those are two valid points and I am not sure the basis behind that !

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18 Ramesh June 15, 2012 at 12:21 pm

Hi
I saw in TOI that if there was a fixed rate earlier at the time of sanction and first disbursement and then the loan was changed to Floating rate then this is not applicable and thus Banks can still charge for pre payment of loan for such type of loans. How true is this.

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19 Manish Chauhan June 15, 2012 at 5:34 pm

I dont think so .. any loans which is now on floating shall implement this

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20 prabe June 15, 2012 at 1:18 pm

I just hope NFBC under whom HDFC ,LIC and other come under issue a similar order so it will be easier for all.

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21 Manish Chauhan June 15, 2012 at 5:34 pm

Which NBFC are you dealing with ?

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22 prabe June 15, 2012 at 8:38 pm

im dealing with HDFC they dont have pre payment charges when paid from pocket but charge if shifting to another institution

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23 Pandaba Kumar Singh June 15, 2012 at 1:31 pm

Mr Manish Good afternoon,

Very well suggestion u r giving and this is most well come ,but one thing when u r giving valuable idea to any customer plz advice them to share among his/her friends/relatives for better knowledge and it should be popularized in rural area also where % of knowledge regarding banking ideas is very poor.

thanking u
P.K.Singh

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24 Manish Chauhan June 15, 2012 at 5:33 pm

Yea .. we request all the people to really spread it !

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25 Pandaba Kumar Singh June 15, 2012 at 8:34 pm

Good evening Mr.Manish,

Thank u for ur reply & I m very much impressed on your reply,plz advice me how i will be able to serve for the poor people of our country as u know very well that most of the Indian people are living under below poverty line,how they will be benifitted as survival is too difficult in rural area ,plz do some thing for them,thanking you.

P K Singh

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26 Manish Chauhan June 19, 2012 at 12:33 pm

Will surely let you know when I need any support !

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27 Sudarshan June 15, 2012 at 1:50 pm

I have taken Home Loan in HDFC only… There is no prepayment charges (took the loan few months back only).

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28 Manish Chauhan June 15, 2012 at 5:32 pm

Yea .. This must be because of this same reason !

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29 Muthu June 15, 2012 at 2:10 pm

AXIS Bank doesn’t collect any pre-closure charge for any type of loan inlcuding Personal Loan. I have borrowed 3lakhs from AXIS and paid a part of amount few days back and i didn’t pay any pre closure charge.

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30 Manish Chauhan June 15, 2012 at 5:30 pm

Yea Some banks at their level might not be charging it , which is really a good think , but this rule is by the RBI for all the banks

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31 Muthu June 15, 2012 at 2:12 pm

“home finance companies like HDFC” – what does home finance company means to? Is it that such banks will not strict to RBI’s policy and rules? Can anyone please help me out here.

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32 Manish Chauhan June 15, 2012 at 5:29 pm

Nothign like that .. what is the exact issue ?

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33 Suresh Kr. Ray June 15, 2012 at 2:36 pm

Manishji, Thanks a lot for ur afforts in keeping us with lattest updates.

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34 Manish Chauhan June 15, 2012 at 5:29 pm

Welcome

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35 Chetan Pujara June 15, 2012 at 8:44 pm

Hi Manish,

It is really a boon for Home Loan borrowers like us.. Infact I use to prepay small amount of money fapart from the regular EMI and LIC used to charge 2% penalty every month on month… Atleast I am Happy finally RBI has taken a correct decision. I will start making Prepayment on the principle again. Thanks for the Info…

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36 Manish Chauhan June 19, 2012 at 12:31 pm

Welcome Chetan

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37 anita June 16, 2012 at 1:38 am

hi, I had taken a loan from india bulls, Rs, 40=Lac for 120 month, emi will start from 1-4-2013, when i aply , Jan, 2010 the intrest rates was @8=25% , but india bulls not send me sensetion letter, only a letter in this letter 10.25% rate of intrest , so now i want finesh this loan , what i will do , pls help me

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38 Manish Chauhan June 19, 2012 at 11:20 am

I dont understand your question , you want to finish the loan , so what is the question here ?

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39 anita June 20, 2012 at 10:51 am

hi,
yes i want finesh my loan up to 50% before Emi start , (1/4/2013) .how i can do.
anita

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40 Manish Chauhan June 21, 2012 at 3:29 pm

Pay off the 50% outstanding , that will reduce the EMI

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41 Ritesh Kumar Singh June 16, 2012 at 1:42 pm

Hi Manish,
Thanks for a good article once again !
just wanted share with all the readers that I had just prepaid my Home loan around 2 months back with axis bank and there was no prepayment charges for same. though there were couple of rounds to the bank (Axis Bank retail centre) but the process was smooth and i have got the papers after 1 month also. The customer care was quite supportive during the entire process.
I had prepaid the Home Loan as my floating rate was 12% and no sign of reducing, though I assume new loans are being provided at 10.25% by same bank.
Thanks,
ritesh

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42 shobha June 19, 2012 at 12:05 pm

Hi,

Yes, even I had a Home Loan with Axis and have been Prepaying and finally foreclosed it last week without any extra charges.

The entire process is very smooth and without any Hiccups with constant Msg’s and Mails from their side on loan status, outstanding and so on.

Only thing, I missed from Axis bank was, that I needed to Physically Visit them every time. If it was online like SBI and some other banks, it would have been Perfect.

Regards
Shobha

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43 Manish Chauhan June 19, 2012 at 12:46 pm

mm .. thanks for sharing your experience with Axis bank

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44 vijay June 18, 2012 at 5:13 pm

Hi,

I have a PPF account with SBI opened few years ( 5yrs ) ago made some investment for 1 lacs and i did not make any further investments after that.. will the account be active?.. i read in this blog which says RS500 has to be made every year for the ppf to be active. can someone recommend if i need to continue with the same ppf account or can i open a new one in ICICI which gives me the option to investet ppf online.is it okay if the same person hold two diffrent ppf accounts?

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45 Manish Chauhan June 18, 2012 at 6:05 pm

Vijay

You cant open two PPF account, better activate the old one .. you will need to pay just 3k approx for that and then transfer it back to ICICI if you want

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46 vijay June 18, 2012 at 8:08 pm

Hi Manish.

Thanks for the reply. is 3k is a penalty or will it be added to my existing PPF account? i came to know that 500Rs is required to make the account active only now from ur website. Thanks for all ur posts.

Vijay

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47 Rashmi June 19, 2012 at 10:06 am

This is a good move but sadly, it does not apply to teaser rate loans, wherein a fixed home loan interest rate is offered for first few years later converted to floating rate.

I know for sure in case of Housing Finance companies like HDFC that are governed by National Housing Board. The NHB circular dated 4-4-12 (which circular is also available on NHB website) clearly says that in case of dual rate loans, only if the prepayment is from own sources, will the prepayment charges not apply. In case one wishes to foreclose the loan by switching to another bank, the prepayment charges will be applicable. Happened in my case (dual rate / teaser loan) wherein a huge prepayment penalty detered me from switching to another bank.

Rashmi

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48 Manish Chauhan June 19, 2012 at 10:18 am

hmm.. thanks for this update . you have very clearly explained it to us .

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49 keshavnad June 24, 2012 at 1:03 pm

Want to share one more thing in respect of dual rate loan how Housing Finance companies are misusing it they are offering fixed for first 3-6 months later it gets floating as a result they are trapping the customers so that they don’t move out to other lender.

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50 Manish Chauhan June 24, 2012 at 1:33 pm

Thanks for your views on this fixed – floating interest rate

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51 Kamalakar June 20, 2012 at 1:10 pm

I also Wanto to know About Charges HDFC taking To chg Interest rate For Existing To lower One interest (Interest changing as per market )
Is there any Circular Regarding This

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52 Manish Chauhan June 21, 2012 at 3:26 pm

ASk to HDFC directly , they will update you on this . Also in comments section a lot of people have clarified this

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53 Irshad June 25, 2012 at 12:13 pm

Hi,

My current loan from Axis is @12% floating ROI.
I got 2 options now but a bit confused which one to go for

1. Option1 : Pay Axis bank around 10K & bring down the ROI to 10.75
2. Option2 : get my loan transferred to other bank. (Although Axis doesn’t charges any penalty on foreclosure but only if its self paid & not transfer, but considering recent RBI orders, they might not charge for transfer either. Any idea guys ?? )

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54 Manish Chauhan June 27, 2012 at 10:59 am

Irshad

Better ask this on our forum : http://www.jagoinvestor.com/forum

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55 Satish K July 3, 2012 at 4:43 pm

Hi Manish,

I have a loan with ICICI Bank on fixed rate of interest. As pointed by you (or some other member), they are charging a 2% penalty on foreclosure of the loan for fixed rate of interest. However, as per the NHB guidelines, they should not charge the same if the loan is being closed out using my own sources and if I am not taking any help from any financial institution. When I presented the NHB circular to them, they claimed that the NHB circular is applicable only to Housing Finance Corporations and not to banks. Since my loan is from ICICI bank, they say that I will have to pay the 2% penalty (which comes to almost 50,000 Rs). I am totally miffed by this and wanted some expert opinion on this. Can you please share your thoughts.

Thanks
Satish

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56 Manish Chauhan July 4, 2012 at 11:10 am

Yes they are right , they are not governed by NHB rules, its RBI rules which apply to banks

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57 Satish July 4, 2012 at 10:49 pm

But isn’t NHB a wholly owned subsidiary of the RBI? If so, then wouldn’t the rules of NHB also apply to banks? Seems a little strange to me.

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58 Manish Chauhan July 5, 2012 at 10:21 am

Thats a good point actually ! .. NHB is wholely owned by RBI, but a lot of times it happens that other identity can have its own rules , not sure on this , you can discuss this on forum : http://www.jagoinvestor.com/forum

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59 Umesh July 4, 2012 at 9:44 pm

Hi Satish,
I have just foreclosed my loan with ICICI bank with no prepayment/foreclosure charges.
I realy found the experience hasslefree and pleasant(wasn’t expecting!), as I had to go just once to my nearest branch and collected all documents within 4-5 days from the same branch.
The rate was floating at 11.5% after march’12(till then it was under 2 year fixed rate).
May be you can try first converting your fixed loan to floating and then foreclose. Nowadays banks offer more of floating rates and shy away from offering fixed rastes, so they may charge a little or nothing for this conversion.

Good luck.
Umesh

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60 Satish K July 5, 2012 at 1:45 pm

Thanks for the response – Umesh and Manish.

I am already pursuing converting the loan from fixed to floating – hope that goes smoothly.

Regards,
Satish

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61 Deepak Arora July 6, 2012 at 1:25 am

Hey Manish,
Many Thanks for this forum.

I have a home loan from HDFC, if I get or borrow some amount from my cousin and use it to foreclose would that be chargeable.

Regards,
Deepak

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62 Manish Chauhan July 6, 2012 at 7:43 pm

I guess yes , prepayment is FREE only if you pay from your own resourses. Dont tell bank that you took it from your cousin, just ask your cousin to transfer to your bank and later you repay him

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63 abhijit July 9, 2012 at 3:49 pm

I have taken an housing loan of Rs. 700000/- i have paid my premuims for three years. @13.75%. my total outstanding dues is Rs.675000/- if i pays my total outstanding dues…how much amount i have to pay?
will interest @13.75% would be chargeble on total dues…or any penalty i have to pay?

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64 Manish Chauhan July 9, 2012 at 6:32 pm

As your total outstanding is 675000 , you will have to pay that much only if you are paying from your own source !

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65 abhijit July 10, 2012 at 1:30 pm

thanks for the same…

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66 ramesh July 23, 2012 at 5:47 pm

Hi. I just wanted to know. I have home loan of 130000 and I have taken this loan two years back when interest rate was 8.25%. But now it has increased to 11.75%. Bank has given an option to conversion of interest rate of 10.25% with converstion fee of around 7500, which is presently given to new home loan customers.Can some one suggest me is it better to go with it or not.

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67 Manish Chauhan July 25, 2012 at 6:28 am

Which bank loan is it ? Recently RBI has made sure that there should be no fees charged for moving from higher interest to lower one http://www.jagoinvestor.com/2012/06/prepayment-charges-abolished-by-rbi.html

If the bank comes under NHB , then they might charge.

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68 ramesh July 25, 2012 at 11:28 am

HDFC Bank.

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69 Manish Chauhan July 27, 2012 at 7:55 am

Yes HDFC will charge for it , see others comment on this thread !

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70 S.Prakash July 31, 2012 at 4:23 pm

Dear Manish,

I have taken a Housing loan of Rs. 7,65,000/- from LIC Housing finance 4 years ago. Now my outstanding loan amount is 5,30,000. The loan will terminate in 2021. I have invested around 6 lackhs in FDs. I am in 20% tax bracket. Is it wise to repay(prepay) the entire loan amount of Rs. 5,30,000/- and close the loan account or continue the EMI Payment of Rs. 8713/- pm. Kindly advise.

regards,

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71 Manish Chauhan July 31, 2012 at 5:11 pm

If you do not take into consideration tax benefits, then yes paying off the loan will make sense

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72 siddharth August 24, 2012 at 3:30 pm

I have taken 21,00,000 Home loan (floating interest rate) and 20,00,000 loan against property on floating interest rate for construction of my house. I want to shift the loan to other bank for which IDBI Bank is charging me 2% each as prepayment penalty + service tax . Kindly guide me

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73 Manish Chauhan August 26, 2012 at 12:21 pm

That is now abolished. what are they saying about it ?

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74 siddharth August 26, 2012 at 7:49 pm

Dear Manish

Kindly guide me how to handle the bank, as they have clearly mentioned the penalty in foreclosure letter issued to me.

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75 Manish Chauhan August 29, 2012 at 10:38 am

You have signed the papers right ? So you agreed to it, now you are binded by law. cant do anything !

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76 Sunil Bhatt August 25, 2012 at 1:19 am

Hi Manish,
I have taken a loan of 6,50,000 from Syndicate Bank in August 2005, with an EMI of 6500 for 20 years. Interest at that time was 7.75 or 8%, floating. It is almost 7 years to pay Rs. 6500 montly and when I recently checked the outstanding amount by statement, it is showing 5,80,000 more to be paid as I want to make a prepayment. It is shocking that I just paid 80,000 for the last 7 years. What should I do in this case, please guide me.

Thanks and Regards,

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77 Manish Chauhan August 26, 2012 at 12:14 pm

Sunil

thats how it works . in long term loans, in the starting year , your EMI contains much of interest and not principle ! , there is nothing wrong from bank side, thats the reality !

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78 Sudheer Bhat September 11, 2012 at 10:07 am

Hi Sunil,

What you can do is to do a part payment to your loan. If you have ready cash say 1-2 lakhs in savings with you which you do not intend to use in near future, you can pay towards the loan. The outstanding principal will be reduced as well as the loan term and interest. You can also increase the EMI amount if you have the ability to do so.

I have done this for my home loan taken from ICICI.

Thanks,
Sudheer Bhat

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79 sajad September 10, 2012 at 5:39 pm

i had taken personal loan 3 lac from hdfc bank with int 13% and Emi of 10500 per month.Now after 5 months i want to pay the loan amount back .Whether i have to pay interest of 5 months or more

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80 Manish Chauhan September 12, 2012 at 10:29 am

You just need to see what is the “outstanding amount” . You need to pay that and the prepayment penalty charges if any

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81 sajad September 11, 2012 at 2:53 pm

Dear Manish kindly reply my comment

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82 Kashinath Vajpai September 12, 2012 at 4:47 pm

Dear Manish: I am impressed with the kind of responses are coming from you to the people asking about HL. I have following inquiries :

1. I have a Housing Loan of 27 L from HDFC as Adjustable Rate Home Loan on floating interest. The EMI will start from this month end (30 Sep 2012). I wish to go for a pre-payment of about 8-9 L during Nov 2012. Will HDFC charge me for pre-payment in any manner. Is there any clause like 3 months of EMI should be paid first.
2. What is Adjustable Rate Home Loan (ARHL) and Accelerated Repayment Schedule (ARS)? Any clue about them and in my case can I switch to ARS in case needed to go for major re-payment schedules.
3. When the HDFC asks for bank statement, what does it means? The source of income from where the pre-payment is coming? And how important is this?

I appreciate your response on these.

Thank you so much for your time and best regards.

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83 Manish Chauhan September 13, 2012 at 10:49 pm

1. Yes , it might if its written in terms and conditions

2. No idea

3. Yes it matters , only if you are paying from own sources, they dont charge prepenalty .

I think you should discuss it in length at our forum – http://www.jagoinvestor.com/forum/

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84 Swastik Sant September 14, 2012 at 2:37 pm

I would like to know if prepayment premium has to be paid for a loan whihc was settled prior to this notification by the RBI. is the present notification by RBI on prepayment premium prospective or retrospective. Please give me correct legal View

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85 Manish Chauhan September 18, 2012 at 1:31 pm

Its only for future settlements now

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86 Vivek September 20, 2012 at 1:48 pm

Dear Manish,

I have taken a loan from HDFC IN 2009, which is now at floating rate of 10.75%. I want to part prepay the loan from my PF.

In such case will bank charge prepayment penalty.

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87 Manish Chauhan September 22, 2012 at 1:52 pm

It should not charge now after the recent RBI guideline !

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88 Richard September 28, 2012 at 12:42 pm

i had taken personal loan 2 lac (5yrs EMI) from hdfc bank with int 14% and Emi of 5106 per month. Now after 6 months went i contact the bank for preclosure bank asking to waiting till 12 months to do the preclosure. What is the guidelines for minimum period for EMI to be paid for preclosure.

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89 kamal sabharwal September 29, 2012 at 6:40 pm

this rule is applicable for personal Loan Please advise

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90 Manish Chauhan October 2, 2012 at 3:16 pm

Yes

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91 Abhijeet October 9, 2012 at 12:47 pm

Hi Manish,

I have a residential land which my parents had bought and it is registered on my name. And, I also have a home loan running on floating rate.
Can I sell the residential land and prepay my home loan?
Do you have any idea, what are the tax implications etc. if I do so?

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92 Manish Chauhan October 12, 2012 at 3:34 pm

You can do that ..

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93 Chandi Prasad October 29, 2012 at 3:48 pm

Hi Manish,

I m going to take home loan from India bulls that is rite now interest rate 10.25 for 2500000.
Now my question is that in future how they increase the interest rates. for example: they have 2 slabs that is upto 2500000 – 10.25 and above 2500000 lakhs 10.75.
a)If RBI increase or decrease the interest rates how India bulls increase or decreases interest rates…?
1)suppose to increase 0.25.
2)they will increase 10.25+0.25 = 10.50 for upto 25 lakhs slab
3)and 10.75+0.25 = 11.00 for above 25 lakhs slab?
Please help me out?
Thanks in advance.

Thanks
Chandi Prasad
8904416139

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94 Chandi Prasad October 29, 2012 at 4:17 pm

Or they combained both slabs and increase the rates in remaining tenor?
or India bull will decide on customer to customer variation interest rates?
Please help me out.

Thanks in advance.
Chandi Prasad.
8904416139

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95 Manish Chauhan October 29, 2012 at 6:20 pm

Yes, this is how it will workout !

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96 Chandi Prasad October 30, 2012 at 9:35 am

Hi Manish,

Your talking about which point?
Pls reply.

Thanks in Advance.
Chandi Prasad

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97 Manish Chauhan October 30, 2012 at 9:54 am

They can increase the rates , when the govt does it .

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98 Chandi Prasad October 30, 2012 at 10:00 am

is they maintain the slabs for full tenor?
Or they combained both slabs and increase the rates in remaining tenor?
or India bull will decide on customer to customer variation interest rates?

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99 Manish Chauhan October 30, 2012 at 10:07 am

I suggest to discuss this at length at our forum http://www.jagoinvestor.com/forum/

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100 anand nayak October 31, 2012 at 6:50 pm

Hi Manish,

Does this rule of no foreclosure charges apply to loan against property as well?

Regards
Anand

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101 Manish Chauhan November 2, 2012 at 11:20 am

NOt sure on that

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102 G.C.Jayakumar November 2, 2012 at 4:29 pm

Sir I Have taken a home loan from karnataka bank based on first year fixed and following 14 year on floating charge basis.Now I Am planning to tansfer my loan to another bank namely SBI so now karnataka bank is asking me to pay a sum of 1% on the loan amount as take over charges.Now i want to know whether there is any kind of rules such as to pay 1% penalty as take over charges to karnataka bank if there is any rules kindly give me information specifically as soon as possible.(if you send me email it is better)

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103 Manish Chauhan November 6, 2012 at 5:22 pm

Just check your agreement, it will be mentioned there !

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104 Inder November 5, 2012 at 3:18 pm

I have a land loan with HDFC. Earlier whenever i used to repay no charges were applied but this time they charged 2% extra citing land loan. Does RBI no prepayment charges does not apply in this case.

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105 Manish Chauhan November 6, 2012 at 3:17 pm

I am not sure on this . check on our forum http://www.jagoinvestor.com/forum/

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106 Karthik January 29, 2013 at 9:04 pm

Hi Inder /Manish
I also wanted to clarify on the same , does te RBI norms apply to Land loan or only to housing loan. Some bankers claim that in the sanction letter they give as 0% pre-closure charges for housing loan( even though you avail only land loan) .But at the time of pre-closure they charge 2% on the outstanding it seems.Please clarify this point especially with Axis bank

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107 Karthik January 29, 2013 at 9:15 pm

Hi Inder and Manish,
I have the same clarification . as per RBI norms is there any pre-closure charges to the land loan or the 0% pre-closure is applicable only for the home loans? Axis banks states they would mention as 0% charges on pre-closure of housing loan in the sanction letter (altough you apply for Land loan) at the time of closure they might charge 2% citing that clause is applicable only for housing loan and would continue to charge 2%. Please clarify.

Also what is the meaning of pre-closure – does it include part payments as well or only full closure of the loan before the tenure?
meaning if I take 40 lakhs for 10 yrs and I part-pay 10 lakhs after 1 st year can will they charge 2% on the balance 30 lakhs ? and after 6 months i pay another 5 lakhs , they charge again 2% of banalce 25 lakhs ? how does this pre-closure or part payment works … please clarify..

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108 Manish Chauhan January 30, 2013 at 1:24 pm

Karthik

I am not clear on this at the moment, please open a thread at our forum to discuss this , your issue will be solved for sure – http://www.jagoinvestor.com/forum/

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109 Phani M November 7, 2012 at 9:19 pm

I am trying to closing an LICHFL home-loan and I find that the foreclosure and handover of documents will take 1 to 2 months. Anybody knows if this is a normal delay? I wonder if this is the bank’s way of circumventing and/or protesting RBI’s ban of forclosure surcharge. The delay in documents delivery means that I cannot complete a sale nor get the sale-proceeds. Effectively, I lose the interest on the amount generated from sale.

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110 Manish Chauhan November 12, 2012 at 8:48 am

No idea on that . you should better discuss it on our forum – http://www.jagoinvestor.com/forum/

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111 KC Choudhury November 9, 2012 at 3:21 pm

Sir,
I had taken home loan from LIC Housing Financial Ltd in January,2012. Now I have decided to take over the entire loan amount by SBI. LICHFL is intimating the outstanding amount including the pre-closure charge of Rs.30000. Whether RBI guidelines are applicable to LICHFL wherein pre-closure charges have abolished from 5/6/2012
Thanking you

Yours faithfully
KC Choudhury

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112 Manish Chauhan November 12, 2012 at 7:42 am

it should be applicable to them also , check with RTI if they dont respond properly !

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113 Mujibur November 12, 2012 at 12:57 pm

Hi Manish,
I am going to take home loan, please tell me which bank is giving less interest as well no preclosure charge

Thanks,
Mujib

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114 Manish Chauhan November 15, 2012 at 7:55 pm

You need to talk to many banks to find it out !

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115 Divya November 15, 2012 at 7:20 pm

Hello Sir,
I have a loan from HDFC bank, loan amount is 50 lakh and emi is going around 56,000 and for 15 years.
Now at present loan amount 39 lakh is remaining.
I want to reduce my EMI and at the same time Increase the no. of years.
Is it possible.
Please advice me

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116 Manish Chauhan November 15, 2012 at 7:27 pm

It will be tough now , but you wont be able to reduce it a lot , from 56k , it might come down to 45 or 40k , not more ..

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117 Shirish November 19, 2012 at 3:52 pm

Hi,
thanks, for the article. How soon can the pre-payment be done after the EMI starts? eg. i have a loan from LIC whose EMI started from Mar’12. Can I prepay some amount now? or do i have to wait for some period.

Thanks

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118 Manish Chauhan November 20, 2012 at 3:19 pm

This will be clearly mentioned in the agreement .

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119 Anil November 20, 2012 at 12:47 pm

Hi,
Is this rule (No pre closure charges) applicable to Personal Loans?
HDFC is saying that there is a pre closure charges of 4% on personal loans.

Please advice.

Thanks
Anil

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120 Manish Chauhan November 20, 2012 at 1:58 pm

Check your agreement with them, it should mention that. Else its not there !

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121 kartik November 21, 2012 at 2:18 pm

hi manish
i took housing loan from hsbc bank for 74 lakhs on june 2005 for 7 % and i have repaid 7800000 and the outstanding principal is 6850000 and my account is became npa and even after that i paid 1500000 in september now is given a public notice for sale . what to do now

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122 Manish Chauhan November 25, 2012 at 11:56 am

I am not sure what do you want to ask here ? Everything is happenign as per terms and conditions , right ?

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123 kartik November 25, 2012 at 2:10 pm

no when they declare the account as NPA they cannot take the interest . But had ever i been paying is going to interest. Every 2 month they are sending notice of sale .

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124 Manish Chauhan November 30, 2012 at 3:20 pm

Better file a complaint with banking ombudsman !

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125 Rishu Vyas December 4, 2012 at 11:30 am

Dear manish,
I availed a lap at 13% floating as per agreement but am being charged at 13.5% as of now, which i realised after an year. Now I dont feel comfortable with this NBFC and want to forclosure the loan but as per agreement they charge 5% . I want to close because they have not dealt fairly. What should I do? The foreclosure amount is large but the nbfc has made a mistake.
Please advise.
Regards,
Rishu Vyas

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126 Manish Chauhan December 11, 2012 at 4:27 pm

First get clarity on this part that why are they charging 13.5% instead of 13% ? It might happen that you are making assumptions !

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127 Deb December 22, 2012 at 5:25 pm

Dear Mr. Manish,
I had some bad credit card history sometime in 2007-08, I had some 6 credit cards with me out of which I had settled 2 of them after negotiation with bank and rest 3 are closed normally paying all pending dues. Now, for the last 4 years, I am having only 1 credit card which is of SBI and I have totally clear record for that using this card for last 5 years. In CIBIL, my score is 744 out of 900 currently and I am trying for a home loan.

I have recently applied in HDFC & LIC, they both have rejected my loan application based on past credit history whereas I dont have any liability currently. My salary is more than 6 times the EMI payable and I have a stable job, more than 5 years in the present organisation.

I dont know what to do now. Where to apply for home loan? I have applied in FIRST BLUE HOME FINANCE LTD and they are saying that they can provide me loan. But, I am not sure whether it will be good to take loan from FIRST BLUE HOME FINANCE LTD. I am in deep trouble and confused. Can someone please help? Also, is FIRST BLUE HOME FINANCE LTD governed by RBI guidelines?

Thanks.
Deb.

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128 Manish Chauhan December 24, 2012 at 9:59 am

Deb

Your past credit history is to be blamed here , you will need to clear the outstanding about of those “settled” loans first and over some months, your score should improve. Did you apply for your report ?

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129 Murali Krishnan December 29, 2012 at 6:48 pm

Dear Mr. Manis,

Whether Prepayment Charges abolished for old loans also. I have taken my home loan from a psu bank 2 yrs back (floating interest rate based on bank’s BASE RATE). Now i am trying to switch the loan to SBI which is 1.10% lower than by current interest rate (from next year the difference will be 1.35%).Considering my loan amount of 4o lakhs, this will be huge saving. But the bank is not cooperating me in the process. The bank guys not even willing to give the pre-closure letter which is base document for shifting my loan. Also the manager says that there will be prepayment charges since the RBI rule is for only new loan and my loan sanction letter has mentioned the prepayment penalty as 0.5 %. Does the prepayment charges clause mentioned in loan sanction letter is still valid ?.Please guide me how should proceed in this case ?. Your comments will be helpful to me.

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130 Manish Chauhan December 29, 2012 at 7:06 pm

Its abolished for all the loans now , just because its there on your agreement does not mean you need to pay it !

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131 Murali Krishnan December 29, 2012 at 7:24 pm

Thanks manish for your quick reply. How to proceed if the current bank doesn’t coperate in switching the loan like not giving the preclosure letter (which is base document for the new bank), not showing original document.

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132 Manish Chauhan December 29, 2012 at 7:41 pm

If its a PSU , use RTI to ask your questions and they have to give RIGHT answers ! , if its pvt , complain to banking ombudsman .

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133 Neerja Singh January 2, 2013 at 5:08 pm

Dear Manish
I have taken apersonal loan of 4,00,000 from standard chartered bank in Nov. 2011 for 3 yrs. At that time when we asked for foreclosure charges they told that right now it is 4% but soon RBI is going to abolish these charges and that will be applicable in our case too as well but as per that time guidelines, bank mentioned 4% foreclosure charges in agreement. Now, when we called the customer care of bank to foreclose the loan in January they said that foreclosure charges are abolished only for home loans. We have to pay remaining principle(P)+4% of P (I)+12.36% of I in total to make full and final payment. Can anybody help us? Please suggest. Thanks.

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134 Manish Chauhan January 3, 2013 at 11:16 am

Thats correct. Its abolished for home loans only

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135 amol paygude April 10, 2013 at 1:00 pm

dear manish sir,

I have taken home loan from flutron india credit company at 15.5% for 20 years period, at 2012 now i have already paid 14 emis i want to transfer these loan to hdfc at 10.25% i have completed all process now flutron ask me forclosing charges are 4% which is too much i already explain them RBI rule they told me that it is not applicable to them,what to do inthis case as i alrady paid 5laks against intersest & only 20.000/- principle deducted.
pl guide against these.

waiting for ur reply.

regards,

Amol Paygude.
9158884558

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136 Manish Chauhan April 12, 2013 at 11:31 am

Yes, RBI rules are not applicable to FIXED RATE loans . Is it on fixed rates or floating rate ?

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137 amol paygude April 12, 2013 at 4:08 pm

sir this is fixed rate but 4% for forclosure is too much?
if any thing possible
pl reply waiting for ur reply

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138 Manish Chauhan April 19, 2013 at 12:29 pm

You signed it , right ! .. so you agreed for it , now why to complain :)

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139 amol paygude April 19, 2013 at 3:42 pm

sir this is true, that i signed, but at the time of signature , concern sale & branch mgr, told me that at the time of forcloser of loan you no need to pay forclosing charges.
but unfortunately this is verbal commitment.

regards,
Amol Paygude

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140 Manish Chauhan April 26, 2013 at 2:38 pm

Verbal never exists !

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141 Deepesh January 4, 2013 at 1:14 pm

Hi Manish

I have taken a home loan of 11 lakhs from hdfc on 2011.i am planning to prepay 2 lakhs now, i have one lakh in my account and my wife has one lakh in hers. should i have to pay 2% extra fine for the one lakh taken from my wife account?

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142 Manish Chauhan January 7, 2013 at 7:36 pm

Why dont you take that money in your account and then from your account only pay the whole money !

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143 MS January 10, 2013 at 11:06 am

Dear Manish
I have taken a home loan amount of 12 lacs from HDFC bank on ROI of 10.5. I want to transfer it form HDFC to ICICI bank…reason behind is not good customer service by Hdfc …& also offered better ROI from ICICI. as you informed us that RBI abolished Pre payment charges..so will this transfer will come under Circular of RBI? Because i am doing Pre-Payment by taken loan from ICICI & giving it to Hdfc. please let me confirm ..Am I think correctly ?

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144 chandrakant nalawade January 16, 2013 at 1:05 am

i have taken home loan of Rs.4,55,000/- from punjab & maharastra co op bank before 3 years. now they are charging ROI @ 11.25%, so i want to shift it to LIC hsg at 10.25%, but no any bank/FI is willing to transfer the co op bank’s loan, why? still this bank PMC, directed me to pay 2% prepayment charges on shifting even after RBI guidelines. Can some one tell me whether co-op banks are not attracting the RBI’s rules??????

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145 Adarsh January 19, 2013 at 4:09 am

Hello Manish,
I have two queries
a) Does RBI/NFB guideline no pre payment charges, applicable on LAP also, if loan is taken from NBFC
b) I have taken LAP of 5000000 from IB, i want to increase its EMI but the company says it can’t be done as last year ITR does not support it, its strange for me as they were ready to give me a top up of 20 lac 6 months back
Now nither they are letting me to migrate my loan nor they are ready to increase my EMI. Kindly guide me what should i do, As i have to wait for 2 long month to file my new ITR and my bank statements supports my extra earning from past 3 months

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146 Manish Chauhan January 19, 2013 at 7:43 pm

They cant stop you from moving ..BEtter tell them you will talk to banking ombudsman on this and actually do !

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147 Mahesh January 21, 2013 at 1:56 pm

I have taken a homeloan of 33 lacs at 10.7 Fixed ROI from LICHFL. When I ask them to reduce my Interest Rate. They say that they cannot do it. When I ask the procedure for transferring my loan from LICHFL to SBI, they say that I need to pay Transfer Charges of 2% on the O/S Amt. Can you please me about the new rule which RBI has brought in about waving the transfer Charges? Also please tell me how would I contact RTI in case I need their help?

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148 Manish Chauhan January 22, 2013 at 1:27 pm

Yes , this law applies to all the banks as of now … LIC being a housing finance might be trying to escape it for now .. better file a RTI now and enquire on this in black and white !

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149 Mahesh January 31, 2013 at 11:02 am

How would I contact RTI? Can you please tell me the procedure to do it?

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150 Manish Chauhan February 7, 2013 at 5:55 pm
151 Pankaj February 5, 2013 at 2:30 am

Hi Manish,
I am planning to shift home loan from LIC to SBI.For that Builder is asking letter of consent and SBI wants forecloser letter from SBI. How much time will take by LIC to release letter of consent ?Without letter of consent builder is not agree to give NOC for SBI.

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152 Manish Chauhan February 5, 2013 at 10:42 am

There are no clear defined timelines for these issues .. Better file a RTI and ask these issues , which speeds up the process !

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153 Pankaj February 20, 2013 at 11:42 pm

Refering to above mentioned sitituation what is difference between letter of consent and a forecloser letter. Can LIC will issue both the letters?

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154 Manish Chauhan February 21, 2013 at 8:37 am

Where did you read those 2 terms ?

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155 Anil SV February 6, 2013 at 2:23 pm

Hello Manish Sir,
I have a Personal loan from HDFC bank, loan amount is 1,50,000 tenure for 48 months and have paid 8 months EMI 4446 rs. I am planning to close the outstanding amount now but HDFC bank is telling after 12 months only I can closed the loan with the 4% interest charges.

please let me know what they are telling is correct as per RBI rules.

thanks
Anil S.V

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156 Manish Chauhan February 6, 2013 at 2:51 pm

You should rather check the brochure and documents you got from your bank, it will clearly state the rules

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157 Rupesh March 19, 2013 at 4:47 pm

Hi Manish,

I have home loan from GIC at floating interest rate 10.5% however after 6 month they increased the interest rate to 12.5%, when I raised the concern they said 10.5 was the initial offer rate for first 6 months and later on it will be market rate which is 12.5 %.
Can you please suggest what I need to do now.

Thanks
Rupesh

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158 Manish Chauhan March 21, 2013 at 9:05 am

Is it not as per terms and conditions ?

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159 Rajan madaan April 3, 2013 at 2:10 pm

Dear Manish ji,
Can you please tell me the date when the rule of abolish of “HOME LOAN FORECLOSURE CHARGES’ had been passed by the R.B.I.

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160 Manish Chauhan April 6, 2013 at 12:24 pm

Can you check the circular . It was around Mar-Apr 2012 .

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161 Prashant Bajpai April 20, 2013 at 7:05 pm

Dear Manish,
I have borrowed mortgage loan from LIC Housing Finance Ltd
2 months back.I want to make prepayment of this loan.Please
clarify when n how is it possible to make prepayment,is there
any limitation n are there any prepayment charges n what it
will be.
Thanking You.

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162 Manish Chauhan April 26, 2013 at 2:12 pm

Its all written in your agreeement documents

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163 mr patel May 21, 2013 at 5:14 pm

i want to know about car laon forclouser charges. bank can charge forclouser charges?it is only for home loan or any other loan forclouser can levied by them

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164 Manish Chauhan May 25, 2013 at 5:43 pm

Prepayment rules are changed only for Home Loan

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165 Deepesh May 22, 2013 at 1:09 pm

Hi Manish,

I have taken 11 lakhs housing loan now i wish to pre pay 2 lakhs but the amount is in my wife account, Can i give my wife’s cheque if i do so should i pay penalty for the same? or shall i transfer to my account and pay it back?

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166 Manish Chauhan May 25, 2013 at 5:25 pm

Better take it in your account and then pay . Also check with bank on their policy on this

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167 Atul Sachdev May 27, 2013 at 5:15 pm

Can Bank Charge interest on home loan without physical disbursement of the loan amount. It means if the bank has prepared the demand draft on the seller name & the demand draft has not been issued to the seller due to cancellation of the deal. Can Bank still charge interest on the loan amount till the period cancellation request has been made without actual disbursement of the loan amount

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168 Manish Chauhan May 31, 2013 at 5:29 pm

If its in the agreement with bank , then they can !

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169 Siva kumar B. July 18, 2013 at 8:09 pm

I have taken home loan of amount Rs.49,00,000 from LICHFL for term of 15 years on floating rate, but currently my ROI is 11.35% where as other banks are offering home loans for very less floating interest rates. So can I transfer my outstanding loan amount to some other bank which is offering home loan on less floating interest rate?
Also please let me know if LIC would charge me the prepayment fees if the outstanding loan is taken over by other bank. And what other charges could be charged by LIC on me if there is a Loan take over by some other bank.

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170 Manish Chauhan July 20, 2013 at 2:02 pm

Yes. LIC would be charging it , but no other charges !

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171 subba rao July 26, 2013 at 12:12 pm

Hi Manish,
I would like to know some information. What is the best time to pay pre-payment? how much difference will come when pay earlier ( with in 2 to 3 years) and later( after 5 years). Actually, by having loan we can get tax benifit and Interest subsidy from the ecurrent employeer. by considering these components what is the best stratogy?

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172 Manish Chauhan July 29, 2013 at 5:46 pm

Subba

Actually earliar you pay, your loan finishes faster. but considering tax benefits, its not always the best choice

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173 Nandkishor August 18, 2013 at 5:41 pm

Hi Manish!

I have taken LAP from HSBC. if i have to repay the loan, will they charge penalty? and how much it will be.

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174 Manish Chauhan August 21, 2013 at 1:08 pm

It its mentioned in the agreement, then they will

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175 Nandkishor Manjrekar August 23, 2013 at 8:51 am

thanks Manish!

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176 Karthick August 29, 2013 at 9:15 am

Hi Manish, Thanks for your expectional job helping to guys on doubts related to finaicial issues. I have few questions. I got a loan from LIC for 25lakhs and I made a part payment of Rs.1.5Lakh in Feb 2013 they have charaged Rs 4000 as Lumsump fee. As per the rule from RBI is it applicable? Need your guidence on this. Thanks

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177 Manish Chauhan August 29, 2013 at 10:29 am

No , there should not be any prepayment penalty . Why was there any ?

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178 Yogendra October 3, 2013 at 6:16 pm

If from self LIC do not charge, but if transfer to other bank, they are charging 2% of outstanding amount.

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179 ATS Preeth September 19, 2013 at 11:06 am

For HDFC Home Loan Customers :

If you are in Floating Rate – There is no charges for
– Foreclosure (from any sources – this includes Take Over from other banks also) and
– Part Payment (minimum 3 EMI’s).

Just to make things easier, all housing finance division coming under NHB, should NOT charge for foreclosure & part payment. Read the circular http://www.nhb.org.in/Regulation/pol%20cir-43.pdf

But if you are in Fixed or Special Teaser rates, then charges apply :( .

List of Housing Finance Companies coming under NHB … read this URL :

http://www.nhb.org.in/Regulation/List-granted-Certificate-Registration.pdf

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180 Manish Chauhan September 25, 2013 at 2:17 pm

Thanks for sharing that !

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181 anshu November 18, 2013 at 6:53 pm

Hi Manish,
I would like to know some information. Which home loan is better in all aspects…LIC HOUSING FINANCE OR HDFC HOME LOAN.?

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182 Manish Chauhan November 24, 2013 at 9:26 pm

I would rate HDFC – please read more on this – http://www.jagoinvestor.com/2012/05/best-bank-home-loan-india.html

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183 Krishnan January 22, 2014 at 2:26 pm

Hi Manish,

I have a floating rate home loan from First Blue, which has been taken over by DHFL. Since Jan 2014, they have increased the rate of my home loan. Therefore, a few days back, I went to make a part-prepayment on my loan and was told by my loan officer that I can make only 4 part-prepayments on my loan in a year. Last year, I had made similar part-prepayments and this was never communicated to me, nor was I charged as per my understanding. I was also under the impression that RBI has issued circulars to prevent such practices. Has there been a change in the laws? If not, what do I do if they start charging me for part-prepayment of my loan in future? Kindly advise.

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184 Ravi January 29, 2014 at 2:48 am

RBI has no control over neither First Blue nor DHFL.

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185 Krishnan January 29, 2014 at 12:19 pm

Then what about NHB’s under whom they function? Will they be in a position to address my grievance if DHFL decides to charge me for part-prepayment? Kindly advise.

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186 Manish Chauhan January 30, 2014 at 7:32 pm

First a lot of RBI rules do not apply to these kind of companies as they are not banks but NBFC . So it would be good idea to talk to them on the rules part .

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187 Krishnan February 4, 2014 at 2:58 pm

Thanks for your reply, Manish. As per your reply above, should I talk to DHFL or the governing body of NBFCs? And who is the governing body of DHFL? If I talk to DHFL, they will state that as per their rules, only 4 part-prepayments can be made in a year. Kindly tell me who I can speak or write to for clarifications on this issue. Thank you.

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188 Manish Chauhan February 14, 2014 at 8:35 pm

File a RTI to them

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189 Rashid Shaikh March 15, 2014 at 4:30 pm

First of all thanks to Manishji for providing important guidance to us all.

I had taken personal loan fron HDFC of Rs.247000/- & after deduction of processing fees, insurance they disbursed 239000/-, I ha already paid 14 EMI’s & now I want to close the loan by pre payment but as per their terms & conditions, i have to pay 8% as penalty on pre payment, IS penalty on personal is waived or % is reduced?

Awaitng a quick reply.

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190 Manish Chauhan March 26, 2014 at 7:32 pm

The prepayment abolishment from RBI is on housing loan, it might happen that you need to pay the prepayment charges on Personal Loan !

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191 Lokesh May 12, 2014 at 2:53 pm

Hi
I have taken Home loan through GICHFL Rs.1200000/-for 180 months with rate of interest 12.45, and I have already paid (33 *14752/-) installment and processing charges @2% now I want to closed my loan account so request you to pls confirm what is the (Pre-payment charges) i have to pay ( Final amount ) .

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192 Javeed May 19, 2014 at 12:12 pm

Hi Manish,

I have personal loans in Axis bank and one in ICICI bank. I am currently outside the country and I want to pre close these loans. Can I transfer the money to respective Loan Accounts through Foreign Exchange and then raise foreclosure request. Will it work? If not whats the best procedure for me under this situation.

Regards
Javeed

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193 Manish Chauhan May 19, 2014 at 12:28 pm

It wont work always .. its only allowed by some .. The best you can do is issue cheques to your loan account, send them to your branch here in India and then communicate things via email/phone

Manish

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194 Javeed May 19, 2014 at 12:32 pm

Thanks for the info Manish.

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195 inderjit singh June 20, 2014 at 6:43 pm
196 inderjit singh June 20, 2014 at 8:12 pm

Dear sir,
I have avail auto loan from ICICI Bank but at the time of preclosure of auto loan running at fixed rate of interest , bank charges prepayment penalty @ 5.618% on outstanding principal of Car loan. please refer us RBI Circular regarding waive of prepayment penalty.
Regards
Inderjit

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197 Manish Chauhan July 3, 2014 at 11:23 pm

I think that was for home loan only !

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198 Jyoti Handa July 6, 2014 at 9:07 pm

Dear Manish,

I have taken SBI realty loan in 2010, which had a condition to start the construction in 2 years from loan sanction.
All of a sudden , i received a call from SBI that since I have not started the construction in 2 years, they will put a penal interest rate for last 2 years and debited my loan account for the same. Is there a provision to get any relief or a waiver on the penal interest from SBI. My view is that they should charge prospective penal interest after the date they sent me the notice rather than retrospective for the period of SBI’s negligence to notice and charge me the penal interest of the past. Pls. advice. Thanks!

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199 rahul chawla August 12, 2014 at 1:40 pm

Sir I am having loanagainst property from icici bank. I want to close my loan .bank has put preclosure charges of 4.44% . They say my company is co-guarantor in the loan so I have to pay foreclosure charges. Please help me on this.

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200 Manish Chauhan September 20, 2014 at 5:49 pm

Is it as per terms and conditions ?

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201 Srinivas August 19, 2014 at 1:57 am

Hi,

A per the RBI Circular and Press Release on May 7th, No Bank/NBFCs should charge the Pre-Closure charges for Personal Loans.But banks are still charging the same.

Can you please advice me Is RBI is putting the things in wrong direction or banks are avoiding the RBI decision?

I suggest please go through the circular again and guide me whether this is applicable to personal loans or not.

All media news papers showing its applicable to personal loans as well.

Confused with these statements…

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202 Manish Chauhan September 20, 2014 at 5:19 pm

If its RBI notification , then surely no one should charge it

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203 Imraan. September 29, 2014 at 11:37 pm

Hi dear,
Actually I hv heard that all loan which is taken by an individual name. And won’t to foreclose the same. As per the new RBI/NHB s circular there will not be any foreclosure charges levied.. Is it right..?

Reply

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