Prepaying your home loans early is a smart decision. There is no prepayment charge and you will also save substantially on the interest cost. If you are an existing HDFC Home Loan customer, this article brings about a quick guide on how to pre-close your loan.
Pre-closure of a Home Loan can be done in multiple ways; you can pay in part or the entire amount in one shot. All depends upon how much funds you have in hand.
Some of the factors to consider include before starting the prepayment:
Using the customer portal, you can conveniently prepay HDFC Home Loan Online.
|Bank||Interest Rates||Processing fees||EMI Per Lakh|
|HDFC Home Loan||6.95% – 7.65%||0.50%||Rs. 662|
The options are:
You can partly prepay your loan at regular intervals or as per the funds availability. By prepaying the amount over and above your EMI, you will reduce the principal amount and thus save on the interest cost of the loan.
Once you make a prepayment or part payment, you can choose either of the following options for your future EMIs:
i. You can reduce your monthly EMI amount and keep the tenure of the loan the same as earlier.
ii. Or, without altering the EMI amount, reduce the loan tenure.
Loan Foreclosure is when you decide to pay the entire remaining outstanding loan amount to the bank in one shot and get rid of your Home Loan and its interest completely. There could be some prepayment charges involved. The charges vary from bank to bank.
Another effortless way to prepay your home loan is to payout more than EMI amount per month from the actual one. This is one of the most common ways to prepay a home loan. Over the years, your monthly income appreciates with time. You can leverage the additional income in repaying the higher Loan EMI. You can also contact your bank and change the EMI amount.
o For individual borrowers there is no prepayment or foreclosure charge if they opt for HDFC home loan prepayment or foreclosure.
o For other than individual borrowers (where company, sole proprietorship firm/concern, or HUF act as co-applicants), following will apply.
In case of balance transfer/ refinancing- 2% amount being prepaid + applicable taxes, statutory levies & charges. (for individual borrowers)
For other than individual borrowers (where company, sole proprietorship firm/concern, or HUF act as co-applicants):
First and foremost, keep your bank informed about your decision to prepay or foreclose the home loan. Even if you are planning for part payments, the bank needs to be informed as they will accordingly change the payment schedule and the tenure.
Once you are ready for the foreclosure, make a list of all documents that you had submitted to the bank during the loan application. This helps them to retrieve all details from their records once the loan is paid off.
A tentative list of documents would include:
You will also need to submit your id proofs and loan statement along with a letter requesting for closure of the loan.
The bank will then calculate the entire outstanding amount along with the interest and penalties if any.
Next, submit the amount using the cheque or Demand Draft.
Once that entire amount is paid off to the bank, the bank will issue an acknowledgment letter to you stating the same.
The NOC (No Objection Certificate) and the No Dues certificate will follow in some time as it will take a couple of days for the bank to provide the papers to you.
Once the loan is closed, the bank will then hand over all your original property papers to you stating that you are now the official owner of that property and it is free from amortization.
Do not forget to check the update on your CIBIL records. It will take at least 40 days to show up in your report.
Also, make sure you safely keep the bank documents as proof of payment of the loan. The same can help you in case of any dispute on the later date.
To preclose the home loan account, you are required to visit the nearest bank branch. However, you should check the home loan account balance online prior to visiting the bank. Make the entire payment with the help of a cheque. In case of refinancing, the new lender will pay the balance amount before taking over the loan. Do collect original documents & NOC after closing the home loan account.
Yes, you can partly prepay HDFC home loan online. All you need to do is use internet banking or process online payment as you do for the regular EMIs. However, make sure you check the loan account statement next month and get acknowledgement for the same. The prepayment will change your loan tenor or EMI. In case you want to foreclose the account, you should visit the bank branch and inform the bank.
When you prepay your home loan, the linked insurance for your home is reduced too. Thus, on complete closure of the insurance matures. The premium is not refundable.
Yes, you are required to insure the property against fire & other hazards during the loan term. The lender is made the beneficiary of such insurance policy. The cover can be availed along the loan or from a third Party.
Yes, you can close the HDFC home loan account before the loan tenure. There is no prepayment charge for floating home loans.
Opt for prepayment if you have surplus funds and your loan is relatively new. You will save a maximum of interest on new loans.
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