Home Loan prepayment

POSTED BY Nilesh Jain ON March 10, 2011 9:19 am COMMENTS (13)


 I am Nilesh Jain from Bangalore.

 I have a Home Loan from HDFC bank and my query is

 Recently i did some prepayment towards my principal amount and according to HDFC they charged me simple Interest on the Amount i paid.

 I wanted to know is charging Simple INterest is correct as now according to new rule there will be no charge on the prepayment.



Nilesh Jain

13 replies on this article “Home Loan prepayment”

  1. Vikram says:

    Hi, I have a 35 Lac housing loan from Axis bank and want to prepay around 10 lacs . Current interest is 9.35% . Please suggest should I reduce the period of loan or the per month EMI value with this prepayment amount.
    We have taken this loan last year in July .

    Please suggest

    1. You should reduce the period of loan !

  2. Sunil says:

    Manish Sir,
    I have 2 Home Loans.What is the Best Tenure to close High Interest Home Loans of 13 % & 15 % respectively??? The 1st was 20 year Loan Outstanding is 70 lacs @ 12.24 % gets over in 2030(Emi 92000)
    The 2nd was 12 year Loan Outstanding of 65 lacs @15% gets over in 2024.
    (Emi 113000).I can pay 50 thousand extra in each loan every month.Kindly Advise.

    1. Yes, why not .. go ahead

  3. Shalaka says:

    The simple interest is charged for the month only in case you have not already paid the EMI for the month in which you are making the prepayment. Best to make prepayment after EMI is deducted.

    1. Thanks for your comment Shalaka

    2. Monty says:

      Hi i did the full and final payment of my HOME Loan on 19th of the month while emi was already deducted on 10th of same moneth.Yet they charged me 10,000 as Simple Interest ?Do you have any idea why or is this HDFC own way of ripping customer pocket?

      1. I think you need to check with them on calculation part and what are the rules !

  4. pragya says:

    Hi Nilesh
    I have two queries
    1. If i pay more than my EMI each month then the extra amount is reduced from principal amount( yes or no).
    2. I have two home loans first one is seven years old and for fifteen years and second one is three years old and for twenty years old. I want to know that which loan should i choose to pay more then my EMI to repay my loan fast.

    With regards

  5. ashal jauhari says:

    Dear Nilesh, I think you are confused or not properly informed by the HDFC guys. Here is what this simple interest means –

    Say Your Current Outstanding loan amount was 21L Rs. & EMI date was 1st of every month. Now you opt to prepay 3L Rs. on 9th March. So the HDFC “ll charge the interest of 21L Rs. for 8 days from 1st to 9th march & after that the usual interest ‘ll be calculated for remaining 18L Rs. till 1st of april.

    So you are not at loss.



  6. Nilesh Jain says:

    As per the new rules (as per my unerstanding)Now 2% is only charged if you are transfering your loan from hdfc to other bank and not if you are doing a pre payment.

    The Documents which i have from HDFC does not say anything about the 3 years rule.

    The Best Part ,i called up HDFC call center and they told me the Simple Interest charged is only for paper work and in reality entire amount will be taken as principal.

    I got confused and went to one of there Branch ,there one of the executives tells me that call center guys gave me wrong info and what is given you in written is correct.

  7. prabeesh says:

    I have a loan with them and the conditions i saw in the documents that charges are 2% for prepayment of anything above 25% of outstanding principal within first 3 years of loan and nil after that … if this does not hold for you and still they charged you you gotta complain to their higher authority and the taken on other roots to get the job done

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