Banks allow loan pre-payment

Updated: Sep 30 2007, 06:46am hrs
Wribhu Tyagi,(www.deal4loans.com)

I opted for a loan a few years back for which the prepaying tenure was 10 years. But now I want to prepay my loan amount before the end of this term. Will I get some rebate if I choose to close my loan early What is the procedure for the same

Normally, all banks allow customers to prepay loans partially or completely before the tenure. But in case of full foreclosure of a loan, banks charge a foreclosure fee, which is typically 2% of the loans outstanding amount. There is no rebate on foreclosing the loan early. In fact, by foreclosing the loan early you stand to loose the option of claiming deductions because of interest and principal repayment on your loan.

If I opt for a loan, do I need to pay anything as the processing fee

Yes, the processing fee is typically 0.25 % of the loan amount. At times, there are schemes where the processing fee is waived completely or it is offered at a discount.

Due to increasing competition and varied demands of customers, I understand bankers are coming up with innovative home loan products to cater to the specific needs of the loan seekers. Could you please tell about some such loans

One popular option is the home saver or home credit where customers can use their surplus money to save interest. Another product is called step up EMI, where customers can pay lower EMIs initially and then increase the EMI in the subsequent years. In all cases it is advisable to read the offer document carefully and weigh the extra charges which are included in these products.

I took a loan for two years for which I have been regularly paying my EMIs. But for the last two months for some reasons, I could not pay my EMIs. Now that I am financially stable I have paid my previously pending EMIs. I have also started repaying my EMIs regularly. What I want to know is will whether I be penalised for the delay in paying the EMIs or not

The penalty charges for delayed payment of EMI are stated in the home loan agreement, which you would have signed at the time of taking the loan. It is advisable for you to check with your bank for exact details for charges on late payments.

If I buy a property in the name of my wife what benefits will I get

When one takes a home loan, the law allows deductions on interest and principal repayment but only for the owner of the property. It may be advisable for both of you to be a part of the home loan.

Send in your queries to varun.soni@expressindia.com