A recent press report said that the National Housings Bank (NHB) has waived off the penalty on pre – payment of the home loans. This would help the housing finance companies (HFC) to have an edge over banks during this festival season. Bankers have said that the Reserve Bank of India (RBI) should also introduce this kind of guidelines of waiving off penalty on pre – payment of home loan in order to avoid the housing finance companies from having advantage over them.
Mr. R.S.Sangapure, General Manager of Central Bank of India said that the RBI might also soon waive off penalty on pre – payment of housing loan which seems to be an important parameter for the customers to choose a lender.
The NHB has announced that HFCs should not charge penalty on pre – payment of floating rate home loans even if it is not paid out of the customers’ own resources but paid by borrowed money. However, fixed rate home loans would be charged pre – payment penalty. More than 95 per cent of the customers prefer floating rate home loans.
Currently only three banks – SBI, IDBI bank and Axis bank are not charging pre – payment penalty whereas the other banks such as ICICI and HFDC are charging a penalty of 1.5 – 4 per cent on the foreclosure of the loans. However, if the customers pay out of their own pocket they need not pay this penalty but they had to prove that the money came from their sources and not from the lender.