Home loan prepayment charges depend on the type of interest rate (fixed or floating) and the lender (bank or NBFC). Prepayment refers to paying a part of or the entire outstanding loan amount before the tenure ends, helping borrowers save on interest. As per Reserve Bank of India (RBI) guidelines, banks are not allowed to charge prepayment or foreclosure fees on home loans with floating interest rates, regardless of whether the repayment is made in part or full. This rule applies to individual borrowers only, not to companies or institutions.
How Much are the Pre Payment Charges for Home Loan?
In case of fixed rate home loans, lenders may levy prepayment or foreclosure charges, usually around 2% to 3% of the outstanding amount, plus applicable GST. However, some banks waive these charges if prepayment is done using the borrower’s own funds (not refinanced by another lender).
Always check the loan agreement to understand applicable fees and use prepayment smartly to reduce interest burden and loan tenure. Compare lenders not just on interest rates but also on flexibility of repayment terms.
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What is Prepayment Penalty on Home Loans?
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Are There Pre Payment Charges For Home Loan?
shivam
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7 months
2025-05-21T12:32:12+00:00 2025-05-22T16:53:57+00:00Comment
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