Many people in India love to take home loans to build their dream homes. There is nothing wrong with that. If possible, people would like to settle their loan amount in advance. Using this facility, you can save some of the interest money, manage your tax burden, and get multiple benefits.
In this blog, we will talk about the prepayment of home loans, rules and regulations around the prepayment. Once you understand these factors, it will definitely help you choose the right plan and take the right call. Talk to a personal loan DSA to gather enough information about prepayment.
Can You Pay Your Loan Before the Time?
Many people have doubts about loan prepayment. According to the guidelines of RBI, a borrower can prepay the loan amount without any penalties or restrictions. You need to know about floating loan rates and some additional rules before filing your prepayment.
Rules You Need to Follow During the Loan Repayment
Prepayment of a home loan will get you some added benefits for sure. Before that, you must understand the following aspects-
1. Learn about Floating Rates
Although almost all the banks allow borrowers to choose a prepayment facility, it may cost you a floating interest rate. It is you who will decide whether to pay a portion of your loan or the full at once.
2. What about Fixed-Rate Loans?
Have you chosen a loan with fixed interest rates? In that case, you might have to pay some penalty. As you are settling the loan amount before the time comes, you should pay some month’s interest. The rules are difficult to understand. Consultation with an expert will surely help you in the long run.
3. Choose the Minimum Prepayment Amount
A better option for lenders is to choose a minimum prepayment amount to settle your debt. You need to check your loan agreement in detail so that you can avoid any unlawful activity and manage your existing debts.
4. How Many Prepayments Are Allowed?
In certain cases, there is an upper limit to the number of prepayments in a year. Unless you understand these restrictions, you can’t proceed.
5. How to Handle the Notice Period?
Before making the payment, you must call the bank or the lender to inform them about your prepayment. Without informing the bank, you can’t make the payment.
Steps that You Need to Follow During Prepayment of Loans
The following steps will help you in the process of loan prepayment-
1. Review and Check All the Agreements
Before choosing any financial decision, it is mandatory to learn about the terms and conditions of the repayment plan. When you have gathered enough information, it will surely help you take the right call.
2. How Much Amount Is Withstanding?
Prepayment is all about affordability. Home loans are usually for vast quantities of money. When you use a prepayment facility, it will reduce the total interest payment and impact the tenure as well.
3. Talk to the Lending Company
Before taking the final call, it is important to talk to a lending company. Professionals working in these companies must visit branches, complete formalities, and get help from experts. They know how to file for prepayment and get the best outcome.
4. Get a Quotation from The Company
When you inform the lender about the prepayment, they will offer you quotes depending on the principal, interest payable, and more. Weigh different plans and then find out the best choice possible.
5. Have Confirmation
Right now, you don’t need to physically visit the bank or lending company. Online filing will do the job. Once you complete the filing process, wait for some time; in the meantime, you will get approval soon. Be patient till then.
6. Check Regular Updates
Check regular updates. When you are checking things regularly will help you choose the right plans and adjust your monthly payments. Checking a DSA app will surely help you in this process.
Benefits of Choosing Home Loan Prepayment
When you have the right prepayment plans, it will get you the following benefits-
- Use of loan repayment will help you save your interest money. Paying a small amount now will save a lot of money down the line.
- We all are looking for financial security, and choosing a prepayment will surely help us.
To learn more, consult with an expert who can help.
