Charge Prepayment Penalty Only On Fixed Rate Loan Dues

Housing loan borrowers who have chosen for fixed rates might have trouble free terms on their finance as the Reserve Bank of India has recommended banks to modify the penalty arrangement on prepayments and charge only on the remaining amount.

Delhi (I-Newswire) March 25, 2013 - While applying for home loan a person first thinks of the interest rates to be paid. He/she either opt for fixed rate in which the rates remain same for whole tenure period of opt for floating interest rates in which the rates can be changed according to market fluctuations. Housing loan borrowers who have chosen for fixed rates might have trouble free terms on their finance as the Reserve Bank of India has recommended banks to modify the penalty arrangement on prepayments and charge only on the remaining amount. It also revised that lending institutions must focus on raising long lasting deposits to finance more longer-term loans to assist and decrease the EMI burden on housing loan buyers.

A statement on the possibility of bringing in more long lasting fixed rate loan products by financial institutions such as HDFC Home Loan and others from the banking controller has revealed that banks must accuse prepayment penalty just on the remaining finance amount and not on the value of loan that is normally done. The principle would help customers to save considerable amounts if they were to prepay a loan of fixed interest rate. This approach after the Reserve Bank of India recently authorize to lender to perform with prepayment penalty on floating type of housing loans.

The RBI board that organized the statement has also gave advice to banks to let famous the long lasting deposits to expand a long-term fixed interest rate products. The team observed that the Indian Financial system has government bonds for nearly up to 30 years. This generates a benchmark to matter and cost 30 year bonds by lenders. Financial institutions of India like Axis Bank Home Loan, consequently, make an effort to propose loan-term products of loan, like up to thirty years, that would help to minimize the repayment amount of customers. Fixed-rate long term loan product with cyclic interest rearranges condition say for every 7 to 10 years might offered by banks in addition to plain vanilla fixed interest rate products of loan.

Though, banks must take care that the rearrangement of interest rates may not disobey authorization guidelines on the base rate. Lending institutions might explore the alternative of take-out financing. Adding up, banks may walk around promoting securitization market for improved asset-liability management. The team has also recommended that lenders and India Bank Association must play an important role in educating borrowers regarding probable impact of rate alters on their Equated Monthly Installments (EMI).


Dial-A-Bank is India's First Financial Helpline, with service available on a local number "600-11-60   More..0" across 18 major cities in India. Promoted by a group of Senior Corporate Executives, Dialabank helps consumers Compare and Buy the right Financial Product across 96 Banks, 24 Insurance and 48 Mutual Fund Companies.Less..

Contact Information
Phone : 600 11 600

Published in:


Published On:

March 25, 2013

Print Release:

Print Release

If you have questions regarding information in this press release contact the company listed above. is a press release service and not the author of this press release.The information that is on or available through this site is for informational purposes only and speaks only as of the particular date or dates of that information. As some companies and PR Agencies submit their press releases once per week,month or quarter, make sure to check the official company website for accurate release dates as our site displays the press release distribution date only.We do not guarantee the accuracy or completeness of information on or available through this site, and we are not responsible for or omissions in that information or for actions taken in reliance on that information.

Related Releases

Las Vegas Home Being Sold By the Ballen Group
The Las Vegas real estate team, known as The Ballen Group, have entered into discussions with a buyer for a Las Vegas home located on Cherokee Avenue.

The Ballen Group's Team Of Las Vegas Real Estate Agents Are Selling A Las Vegas Home On Bow Creek Court.
The Ballen Group of Keller Williams Realty Las Vegas is selling a home in Summerlin, Las Vegas. The group's Las Vegas real estate agents are thrilled to be a part of selling this single family home.

EzCheckPrinting And Virtual Printer Software Updated For QB With No Price Increase
New EzCheckPrinting and virtual printer software from has new compatibility with Quickbooks 2014 and Windows 8.1 customers without a price increase from last years cost. Get the details by visiting

1000 Premium Business Cards Only $25
MBK Media Group offers an unbeatable deal of 1000 Business Cards, Full Color Front and Back, for only $25

The Ballen Group's Las Vegas Short Sale Currently Pending
The Las Vegas real estate team, known as the Ballen Group, is in the process of selling another home in Las Vegas. The Ballen Group's Las Vegas real estate agents are happy to be finishing another short sale.