Good news is coming for the home buyers or home loan seekers as now pre payment charges has been abolished by SBI and same is likely to be announced by all the major banks in India by virtue of RBI mandate.
State Bank of India (SBI) has decided to abolish pre-payment charges on home loans, giving some succor to borrowers who want to foreclose their accounts. The bank has been charging pre-payment penalties only on housing loans with floating interest rates taken before May 2011, the official said. It has been charging about 2% of the outstanding amount as penalty if borrowers opted to foreclose their loans. The decision from the largest lender will prompt other lenders to follow the suit.
Thus now you can make prepayment without any tension and can deposit the extra cash as and when available to get the benefit of paying least interest component.
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