You have some extra money and you want to foreclose or pre-pay the home loan. But, before pre-payment, it would be better to consider all the aspects related to it. It is possible that by investing that amount, you will get more benefits than the benefits of pre-payment. Keep in mind that most financial institutions recover the maximum amount of interest in the initial years of the loan. In such a situation, pre-payment or foreclosure much later will not be of much benefit. Home loan pre-payment charge
Most financial institutions offering home loans levy pre-payment charges. Currently, there is no penalty for making partial or full pre-payment for floating-rate home loans. However, banks levy foreclosure charges for fixed rate home loans. This charge may vary from bank to bank. According to the rules, if you are making pre-payment from your own funds, then financial institutions cannot levy a penalty. This penalty can be imposed only when you refinance your home loan from another institution. How are pre-payment charges levied? Consider these aspects as well.
