Must know RBI guidelines for Home Loans
Dec 31, 2016 Home Loan
Gone are the days when one had to wait for several weeks for getting one’s home loan sanctioned by the bank. With the use of latest technology and a desire to satisfy the customers, banks and other lending institutions have made the overall process of loan procurement a lot speedier and precise as well.
Nowadays, potential home loan borrowers just need to fill a form online accompanied with uploading of documents. The concerned lender gets back to the customer with the loan’s approval status. Although this process has made sanctioning of loans a lot easier, the repayment of the same still remains a bit tedious, especially if there are several processing charges involved which are to be paid by the borrower.
If you are planning to get finance for purchasing your home, you should have the knowledge of all the charges that will be levied on it. Being aware of all the charges to be paid will ease up your repayment process.
There are several charges which were recently abolished by RBI, So let us have a look at them:
No charges to be paid on Prepayment of Home Loan:
Your EMIs commence as soon as your loan repayment period begins. However, other than the EMI payment, you also have an option of part prepaying a portion of the total loan amount. Part prepayment is a very common practice and helps to reduce your loan repayment tenure in the long run. However, lenders used to charge a fee ranging from 2 percent to 5 percent of the outstanding loan amount as a penalty from borrowers against prepayment. Starting FY 2014-15, the Reserve Bank of India (RBI) has ordered all the lending institutions to abolish prepayment charges for easing the loan burden on the borrowers. However, it should be noted that prepayment charges are abolished only for floating home loans and not for the fixed home loans.
Hence, while applying for Home Loan, always make sure that the lending institution isn’t levying prepayment charges.
Home Loan Transfer Charges:
During the loan repayment period, a borrower has the liberty to transfer his/her home loan from one lender to the other. This situation arises mainly due to high interest rates charged by the bank, unsatisfactory service etc.. However, banks used to charge a fortune from the borrowers for transferring of the loan as foreclosure charges. Due to the large fee to be paid as foreclosure charges, the borrowers used to get discouraged from transferring their loans to other lenders. Thankfully, RBI’s intervention in this matter has been a blessing to the loan borrowers. RBI has strictly instructed all the lending institutions to abolish all kinds of foreclosure fees for floating home loans.
So, while applying for a home loan, always make sure that the lender is not levying prepayment as well as transfer charges. A written agreement in this regard will help to avoid any discrepancies in future.
Nowadays, potential home loan borrowers just need to fill a form online accompanied with uploading of documents. The concerned lender gets back to the customer with the loan’s approval status. Although this process has made sanctioning of loans a lot easier, the repayment of the same still remains a bit tedious, especially if there are several processing charges involved which are to be paid by the borrower.
If you are planning to get finance for purchasing your home, you should have the knowledge of all the charges that will be levied on it. Being aware of all the charges to be paid will ease up your repayment process.
There are several charges which were recently abolished by RBI, So let us have a look at them:
No charges to be paid on Prepayment of Home Loan:
Your EMIs commence as soon as your loan repayment period begins. However, other than the EMI payment, you also have an option of part prepaying a portion of the total loan amount. Part prepayment is a very common practice and helps to reduce your loan repayment tenure in the long run. However, lenders used to charge a fee ranging from 2 percent to 5 percent of the outstanding loan amount as a penalty from borrowers against prepayment. Starting FY 2014-15, the Reserve Bank of India (RBI) has ordered all the lending institutions to abolish prepayment charges for easing the loan burden on the borrowers. However, it should be noted that prepayment charges are abolished only for floating home loans and not for the fixed home loans.
Hence, while applying for Home Loan, always make sure that the lending institution isn’t levying prepayment charges.
Home Loan Transfer Charges:
During the loan repayment period, a borrower has the liberty to transfer his/her home loan from one lender to the other. This situation arises mainly due to high interest rates charged by the bank, unsatisfactory service etc.. However, banks used to charge a fortune from the borrowers for transferring of the loan as foreclosure charges. Due to the large fee to be paid as foreclosure charges, the borrowers used to get discouraged from transferring their loans to other lenders. Thankfully, RBI’s intervention in this matter has been a blessing to the loan borrowers. RBI has strictly instructed all the lending institutions to abolish all kinds of foreclosure fees for floating home loans.
So, while applying for a home loan, always make sure that the lender is not levying prepayment as well as transfer charges. A written agreement in this regard will help to avoid any discrepancies in future.
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