Home loan prepayment penalty is waived out by RBI
The Reserve Bank of India ordered all the banks to stop charging penalty on prepayment of home loans taken on floating interest rates.
The order is circulated after the Damodaran Committee had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers.
The removal of the charges or penalty will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans.
Though many banks have in the recent past voluntarily abolished prepayment penalties on floating rate home loans, RBI circulated the order to ensure uniformity across the banking system.
Earlier, housing finance regulator National Housing Bank (NHB) had directed all housing finance companies to desist from imposing a prepayment penalty.
To read more real estate stories:
Home loans are likely to be cheaper
Home loan borrowers and realtors will gain from RBI rate cut
Source: Financial express
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