A recent press report said that the National Housing Bank which regulates HFCs has planned to waive pre-payment charges on floating rate housing loans.
MR. R Verma, chairman and managing director, NHB told the press that it will soon bring guidelines to remove prepayment penalties on all accounts. He said that they were currently examining the situation and also consulting the RBI regarding the issue.
Reports said that so far the HFCs do not levy pre-payment penalty out of a borrower’s own money but if the housing loan is transferred from any other bank or financial institution, they do charge on pre-closure of loans. This charge is usually 2%.
Earlier NHB has told the press that the issue of levying pre-payment penalty or pre-payment charges by housing finance companies on pre closure of housing loans by the borrowers out of their own sources has been considered by the National Housing Bank and it has been decided that housing finance companies should not charge prepayment levy or penalty in such cases.
NHB has recently emphasized the fact that the HFCs will have to scrap the existing practice of charging penalty on loans brought in by a customer from other lenders.