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Apply OnlineQuick Facts about Pre-Payment Charges

- Home Loans Guide
- Aug 28, 2015
- VIEWS: 3268
A Pre-payment charge or a Pre-payment penalty is a clause in a mortgage contract stating that if the mortgage is prepaid within a certain time period, the borrower will be charged a penalty by the lender. The penalty amount is usually a percent of the outstanding mortgage amount or 3 months of interest, which varies from bank to bank. Why banks charge Pre-payment penalties? When borrowers repay the outstanding sum all at one go, the bank lose out on the interest it would have earned from the borrower, had the borrower paid the home loan EMI’s over a longer tenure. To compensate for this reduction in revenue, banks levy a Pre-payment penalty on the borrower. Why do borrowers pay the outstanding loan amount before maturity? The market interest rates fluctuate every now and then. Many borrowers who have opted for a fixed interest loan will want to refinance their loan, incase the interest rates fall. They usually transfer their loan to another bank offering a lesser rate of interest. The money is transferred from the new bank to the existing bank. The existing bank then levies a Pre-payment penalty on the borrower for the interest lost. The RBI has banned the banks to levy any penalty on individual borrowers for Pre-paying floating loans. Now, some banks are phasing out of the Pre-payment penalty to attract customers. Related Articles:
- Prepaying a Home Loan – Good Idea or Bad
- Part Repayment of Home Loans
- Ways To Repay Your Home Loan Faster
The post Quick Facts about Pre-Payment Charges appeared first on Indiabulls home loans.

Top up home loan vs personal loan a comparison to determine the better choice for loans
Taking on a loan of any kind is a financial responsibility. It is a debt that needs to be repaid, in full, based on the tenure chosen by the borrower. Most banks, housing finance companies and non-banking finance companies offer a myriad of loans to finance the different needs of customers.
- Home Loans Guide
- Jul 23, 2019
- VIEWS: 8335

MCLR in Home Loan
The interest rate is one of the most important components of a loan, especially in the case of a high-value loan that lasts for 2 decades or more; the home loan.
- Home Loans Guide
- May 24, 2019
- VIEWS: 6065

Types of Home Loan Charges
Most people fulfil their wish of becoming homeowners by taking out a home loan. It is the easiest way to afford a property as one can pay for the house in monthly instalments.
- Home Loans Guide
- May 24, 2019
- VIEWS: 6911
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