All home loan borrowers are aware that in the initial few years it is the interest component that forms a major part of EMI than the principle. So when prepaying the loan the higher interest component of EMI itself works out to an additional 3 to 4% rate of interest. Consequently pre payment penalty charges are a loot of the customer
one std idea is to keep on making bullet payments, and when the loan amount is around 1 or 2 lakhs, foreclose it, so that even if you are charged its very negligible
Banks are paying RBI to allow the penalty fees because they earn more from fees than from interest. Imagine penalising someone for returning the money he owes earlier than promised. Such credit behaviour has to be rewarded not penalised. Isnt it funny that looter banks are allowed to charge such penalties by the regulator. many countries have eliminated prepayment fees. but those where capitalism is strong the central bank is powerless.
A group of 100 politicians, actors, businessmen and officers in this country are looting this country on the name of caste, religion and regionalism. In some cities in India one square feet land cost more than 1 Lakh. Petrol is sold at Rs 65 per litre. Your clothes, food items, every thing is sold at double, triple price. These 100 people are looting this money and filling their swiss accounts. People have to unite and fight the present Congress and its allies govt otherwise will make every Indian a slave of foreign countries on the name of pseudo secularism.
when one has savings , which also yields intrest. eg. I need 20 L for home and i have savings. is it wise to opt for home loan only for income tax purposes?
Re: is it wise to have home loan ..?
by Anoop Kumar on Feb 14, 2011 06:58 PM
I would say, never do that. If you have savings don't go for a home loan. Income tax saving is a cliche when it comes to money saving. From my personal experience I feel that my home loan didn't help me to save money.
NHB (National Housing Board) ahs already discontinued pre-payment penalty. Please see below the details. If you search on their website you can see the circular. NHB directive : Discontinue pre-payment penalty Prepayment charges levied on pre closure of housing loans are on their way out. In a circular, issued by the National Housing Bank (NHB), dated October 18, 2010, all registered Housing Finance Companies(HFC’s) have been advised to discontinue levying of pre payment charges/penalties on pre closure of housing loans. Borrowers pre-closing loans from their own sources may now breathe a sigh of relief. Presently, banks charge as much as 2% of the loan amount in some cases. The circular also states that non compliance would attract penal consequences under the National Housing Bank Act, 1987.
