When you pay back your home loan before its development, then banks might charge you an additional/extra amount. It is done to lessen the loss received by the lender. The main reason why people prefer prepayments is to save the amount added, on an interest. Although some banks might not charge any amount for prepayments, some funding firms may charge a minor amount as prepayment fees. Here are a few situations when a leader might put that charge: If the Loan is taken by any Commercial Firm When the home loan is acquired by a business organisation or a firm, then banks are authorised to charge you a pre-payment charge on the same. Use a home loan prepayment calculator to know the percentage of the fee. If it’s a Fixed- terms Loan Every type of fixed rate home loan is not covered when it comes to paying pre-payment costs. Therefore, if you have opted for a fixed/set rate home loan, then you will have to pay the price for foreclosing it. You can utilise/use a home loan prepayment calculator to see/get a clear picture of the amount and charges applicable. If it’s a Dual Rate Loan Dual rate loans are those that have a blend of fixed, as well as altering interest charges. If you repay the loan during the period during its first phase, then you have to pay the prepayment charge. While taking a loan an individual has to repay the amount to the bank within the specific timeline to avoid fines/ fees and extra charges.
Reference Read: What is Home Loan Prepayment Charges Rules?
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AuthorAman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management. |