7. Do remember that Home loan prepayment penalty is removed by most of banks
Do remember, some time back RBI had indicated that banks would be required to scrap prepayment penalties. The charges are waived off on prepayment charges for all customers apart from some minimal charges. If your loan has the flexibility to allow increased regular repayments and lump sum repayments without penalty, take advantage of it whenever you can.
Do remember, saving on the net interest is the most significant advantage of prepaying the home loan, other than the fact that you will retain the complete ownership of the house earlier than planned. The longer the loan tenure, the more the interest repaid, hence its best to repay your home loan in the shortest loan tenure possible, provided it can be managed comfortably within your income. The more you pay off your home loan, the more of the property you own, and the more equity you build up.
- By Brijesh Parnami
CEO – Distribution, Destimoney Enterprises Private Limited
(The views expressed here are author's own)