{"id":4535,"date":"2011-12-14T00:32:38","date_gmt":"2011-12-13T19:02:38","guid":{"rendered":"http:\/\/www.bharatestates.com\/blog\/?p=4535"},"modified":"2020-06-15T04:55:18","modified_gmt":"2020-06-14T23:25:18","slug":"will-the-proposal-to-ban-prepayment-penalty-affect-borrowers","status":"publish","type":"post","link":"https:\/\/www.bharatestates.com\/blog\/will-the-proposal-to-ban-prepayment-penalty-affect-borrowers\/","title":{"rendered":"Will the Proposal to Ban Prepayment Penalty affect Borrowers?"},"content":{"rendered":"

\"\"Prepayment penalty on home loan<\/a> is the amount charged by banks or financial institutions for making whole or partial prepayment of the remaining of the home loan taken by the customer. Recently in an effort to improve the customer service, banks and RBI have decided to ban penalty on prepayment of floating rate home loans. It is good news for those who want to prepay their home loan with floating interest rate. After such a long time customers got a bit relief from penalties. This decision is actually in favour of home buyers who are opting floating interest rate and for those who want to pay the home loan in advance. Currently banks and financial institutions are charging as much as 2 percent as penalty for the prepayment of home loan and it is really too much punishment for doing nothing wrong. Actually it should be the right of a customer whether he complete the tenure or prepays the loan amount. Because of this penalty on prepayment most of the home loan takers feel bad as they are being charged for paying their home loan before the expected period. Under the new proposal a customer can prepay the entire or a part of remaining amount of home loan at floating rate without any penalty.If we see the entire scenario in real estate sector in Pune<\/a>, there is major percentage of home loan takers who are from IT sector. They earn handsomely and can prepay their home loan amounts easily. They get frequent chances to work in foreign countries and thus it becomes easy for them to make good disposable income which helps them to cut down the loan periods significantly and enjoy their properties. The current customers now have a chance to bargain on the interest rate on home loan as they have the option of switching the financer at any time because of no penalty on prepayment. On the other hand financial institutions will realise soon that they may lose existing customers if they do not give the best rate on home loan in the market. In short we can say that now customer can switch home loan without any extra cost or charge.The high rate of interest<\/a> on home loan borrowings charged by banks or financial institutions has another side as well. They make the amount of repayment so huge that it becomes almost impossible for a borrower to prepay part or whole of the remaining home loan before the stipulated time period. We may call it distant thinking of banks to retain their customers. But actually they show that there is fund crisis because of which they have to charge such and such interest rate. The new proposal to curb penalty will indirectly help in bringing down the current rate of interest on home loan.It is actually a proposal in favour of existing as well as prospective customers or borrowers as the tenure to be in debt is now in their hands that to without any financial loss. They can decide as per their financial status when to end entirely or partially their liability of home loan taken on floating rate of interest. New proposal will also attract more potential home buyers to take home loan on floating rate of interest. Buying a home and taking home loan will definitely depend on affordability as well as requirement of an individual.\u00a0 The decision will only affect those who are keen to buy home and not able to decide whether to go for fixed or floating rate of interest on home loan.I don\u2019t understand why banks charge for prepayment of home loan amount instead of giving him or her incentive for paying the remaining amount before completion of the predetermined time period. If I am completing any task before the dead line then I should be rewarded not punished in a normal behaviour but the things are not as they should be in case of home loan providers who work just opposite till now. I guess they are following the old saying that says, \u201cInterest is more important than principal\u201d.Ruchi Mahajan\u0437\u0430\u0439\u043c \u043d\u0430 \u043a\u0430\u0440\u0442\u0443 \u0431\u0435\u0437 \u043e\u0442\u043a\u0430\u0437\u043e\u0432 \u043a\u0440\u0443\u0433\u043b\u043e\u0441\u0443\u0442\u043e\u0447\u043d\u043e<\/a>\u0432\u0437\u044f\u0442\u044c \u043a\u0440\u0435\u0434\u0438\u0442 \u043e\u043d\u043b\u0430\u0439\u043d<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Prepayment penalty on home loan is the amount charged by banks or financial institutions for making whole or partial prepayment of the remaining of the home loan taken by the customer. Recently in an effort to improve the customer service, banks and RBI have decided to ban penalty on prepayment of floating rate home loans. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[447,433],"tags":[],"class_list":["post-4535","post","type-post","status-publish","format-standard","hentry","category-realty-guide","category-tips"],"blocksy_meta":[],"yoast_head":"\nWill the Proposal to Ban Prepayment Penalty affect Borrowers? -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bharatestates.com\/blog\/will-the-proposal-to-ban-prepayment-penalty-affect-borrowers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Will the Proposal to Ban Prepayment Penalty affect Borrowers? -\" \/>\n<meta property=\"og:description\" content=\"Prepayment penalty on home loan is the amount charged by banks or financial institutions for making whole or partial prepayment of the remaining of the home loan taken by the customer. Recently in an effort to improve the customer service, banks and RBI have decided to ban penalty on prepayment of floating rate home loans. 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