Prepayment penalty rbi guidelines on home

In a relief to borrowers,the RBI today asked banks to immediately stop charging penalty on prepayment of home loans taken on floating interest rates. Advertising "It hasbeen decided that banks will not be permitted to charge foreclosure chargesprepayment penalties on home loans on floating In the year 2011, National Housing Bank, the regulator of mortgage lenders, ended prepayment penalty on floating rate home loans for NBFCs and therefore, prepayment penalty ceased to exist. But, loan against property on a floating rate still carried penalty that ranges between 1 per cent to 3 per cent of the total amount disbursed. Borrowers wanting to prepay home loans can look forward to some relief as RBI today said it will hopefully scrap the prepayment penalty within a month. Advertising "We will pursue with the banks to do this (ending prepayment penalties) as soon as possible. But should the system require some time Floating Interest on Home Loan Housing Loan Pre-payment Charges on Home Loan RBI Stop charging prepayment penalty on home loans: Stop charging prepayment penalty on home loans: RBI to banks It had said that detailed guidelines in this regard would be issued separately. Prepayment penalty for floating interest home loans should end: RBI. Poornima Adiga. September 11, 2011. In a major relief to home buyers, RBI has asked banks not to impose prepayment penalties on floating interest home loans irrespective of the source of funds. RBI has rightly pointed out that Repaying your loans before the deadline will soon become a no-brainer decision as the Reserve Bank of India has recommended removing any pre-payment penalty on floating rate loans. It is believed that removal of foreclosure charges or prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers and the competition among banks will result in finer pricing of home loans with the floating rate, RBI had said. The Reserve Bank of India (RBI)'