Pay penalty on pre-payment of fixed rate home loan

There are a few private banks who are offering 100% of the ex-showroom price as a loan, with some caveats.

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December 24, 2019 00:17 IST

cpse da from january 2020, rates of DA payable, pay scale, pay range, Office Memorandum, O.M., CPSE,

Instalments of DA become payable from 1st January, 1st April, 1st July and 1st October, every year.

By Chaitali Dutta

I have a fixed rate home loan from a bank. If I prepay the outstanding balance, will I have to pay any penalty?

– AK Singh

Yes, any fixed-rate loan if prepaid will attract a fee. This is since the bank is expos-ing itself to future interest rate fluctuat-ions without passing on the changes to you. At the time of loan sanction, the bank has factored in your repayment as the future cash flows, which now will not happen. Therefore, the penalty is levied.

In a SBI repo-linked home loan, will the spread differ for every person?

—Pramod Saini

Yes, the spread in any bank differs for each applicant. It depends on credit rating, special festive schemes, tie-up with organisations, etc.

I have a medical emergency and have difficulty in paying EMI. Can I request the bank to defer the EMI schedule for six months? I am willing to pay penalty.

—Anupam Purohit

In India, the facility of temporary deferred payment of EMI is not available. Beyond 90 days from the quarter of an overdue amount, the account is classified as a Non-Performing Asset & your account treated as sub-standard.

What is the maximum loan-to-value I can get to buy a car?

—Aman Kumar Mishra

You will get 85-90% of the on-road price as a loan for your vehicle. There are a few private banks who are offering 100% of the ex-showroom price as a loan, with some caveats. Check with a few banks including where you have your banking relationship, before applying for the loan.

We had booked a flat in 2005 but not yet got possession. Now, towards the last stages of the loan, should I stop paying the bank EMI?

—Vipul Sharma

Continue to pay EMI as stopping that would affect your credit rating. Rather, ask the builder for refund. Also, approach the National Consumer Disputes Redressal Commission for refund & compensation.

For a housing loan, can I make my wife, son and daughter as co-applicant as all are working? If yes, in whose name will the registration be done?

—Narendra Singh

Yes, it is possible. If all are earning, each co-applicant may avail of tax benefits. Loan eligibility also goes up as the repayment capacity is higher. The registration should be done in all four names.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to
fepersonalfinance@expressindia.com

This article was first uploaded on December twenty-four, twenty nineteen, at seventeen minutes past twelve in the am.