Want To Close Your Home Loan Early?' Here's What You Need To Do

May 17, 2023 - 18:24
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Reserve Bank of India (RBI) has recently raised the repo rate by 2.5 percent, leading many banks to increase their Marginal Cost of Funds Based Lending Rate (MCLR). This increase directly affects home and auto loans. Customers, who were previously paying a 7 percent annual interest rate for a home loan a year ago, are now having to pay approximately 9.5 percent. People frequently acquire home loans to purchase their desired homes. However, due to the longer repayment period and interest associated with home loans, individuals desire to settle them quickly. To achieve this, there is an option known as loan closure or prepayment. Most banks and non-banking financial companies (NBFCs) provide the facility of prepayment. Nevertheless, since home loans are long-term loans and banks and financial institutions earn substantial income from them, many companies impose certain charges for prepayment. However, not everyone is obligated to pay these charges.

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