Housing Loans - No More Prepayment Penalty

Alchemist

Administrator
Staff member
#1
Borrowers who have taken loans for housing finance companies will no longer have to pay pre-payment penalty for pre-closing their loans.

The National Housing Bank (NHB), which is a regulator for housing finance companies in India has issued a circular asking housing finance companies should not charge a pre-payment penalty.

According to the circular no pre-payment penalty can be levied

- if the loan is a floating rate loan.
- if the loan is a fixed rate loan and the borrower is using his own money (not borrowed from other financial institutions) to pre-close the loan.

In a separate circular, NHB has asked housing finance companies to offer uniform rates to existing and new customers with the same credit/risk profile.

Experts believe that RBI may soon issue a similar directive for banks too.

Here are the two relevant circulars:

Pre-payment penalty on pre-closure of housing loans.

Uniformity in charging interest (floating rate basis) for old and new customers.
 
#2
In a separate circular, NHB has asked housing finance companies to offer uniform rates to existing and new customers with the same credit/risk profile.

Experts believe that RBI may soon issue a similar directive for banks too.

Here are the two relevant circulars:

Pre-payment penalty on pre-closure of housing loans.

Uniformity in charging interest (floating rate basis) for old and new customers.
Regarding application of uniform interest rate, when I contacted my bank they referred to the NHB policy NHB (ND)/DRS/ Pol-No. 46 /2011-12
February 23 , 2012 regarding the same subject.



It seems the policy of giving uniform ROI to old customers before 19th Oct 2011 is still on hold. Please correct me if I am wrong. My ROI increased from 10.25% from April 2011 to 11.75% from 01/08/2011 . But the bank is offering 10.95% as on date for loan below Rs 30L to new customers.

Thanks.
 

Alchemist

Administrator
Staff member
#3
It seems the policy of giving uniform ROI to old customers before 19th Oct 2011 is still on hold. Please correct me if I am wrong
The deadline has passed - 30th April 2012.

Did your HFC contact you after that or tell you anything about your risk profile?
 
#4
Till date the HFC has not informed me of my risk profile. How is this related to the ROI applicable to an individual for an housing loan ? I think they would have calculated the risk profile at the time of giving me loan.
 
#6
So finally we can have something like paying some or full amount of the loan in full and not paying that stupid fee which only consists and based on the fact of bad feelings of the bank that they will no longer be able to earn on us;) Simply LOL at all of that.
 
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