How to Pre-close your HDFC Home Loan in India

27 Nov 2020 // 27 min read // Home Loans
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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.

Table of Contents: How to Pre-close Your HDFC Home Loan in India

HDFC Home Loan Prepayment

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:

  • Assess your cash needs for immediate, short, medium and long term needs. Do not sacrifice emergency corpus for home loan prepayment.
  • Also analyse if investment in MFs is more profitable than saving interest cost by prepayment or foreclosure
  • Prepay other high cost loans first.
  • If your home loan is in early stage- your HDFC home loan interest rate saving will be higher.
  • Fixed interest home loans have a prepayment charge attached.

Using the customer portal, you can conveniently prepay HDFC Home Loan Online.

BankInterest RatesProcessing feesEMI Per Lakh
HDFC Home Loan6.95% – 7.65%0.50%Rs. 662

How to pre-close HDFC Home Loan in India?

The options are:

Part prepayment:

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.

Foreclosure:

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.

Increase EMI amount:

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.

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HDFC Home Loan Pre Closure Charges for Floating Rate Loans

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.

  • On prepaying HDFC Home Loan within the first 6 months of the loan, 2% of the amount being paid will be levied. Applicable taxes, statutory levies & charges will also apply.
  • After the first 6 months & up to 36 months, prepayment without any charges is allowed for up to 25% of the opening principal loan amount every financial year. Excess prepaid amount over the 25% in any financial year will involve prepayment charges of 2%.
  • On prepayment of loan after the first 36 months no charges are applicable.

HDFC Home Loan Pre Closure Charges for Fixed Rate & Combination Rate Home Loans

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):  

  • Within first 6 months: 2% of the amount + taxes, statutory levies & charges.
  • On prepayment of loan after first 6 months & up to 36 months: Nil for prepayment up to 25% of the opening principal loan amount each FY.
  • Amount prepaid in excess of 25% in any financial year will involve prepayment charges of 2% each financial year.
  • After the first 36 months: Nil.

Process for Pre-Closing HDFC Home Loan

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.

HDFC home loan foreclosure process

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:

  • Possession letter
  • Sale Deed of the property
  • Builder Buyer Agreement
  • Conveyance Deed
  • Tripartite Agreement

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.

FAQs

How to pre-close the HDFC Home Loan online?

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.

Can I make hdfc home loan prepayment online?

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.

How to cancel hdfc home loan insurance?

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.

Is property insurance mandatory for hdfc home loan?

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.

Can I close my HDFC home loan before tenure?

Yes, you can close the HDFC home loan account before the loan tenure. There is no prepayment charge for floating home loans.

What is the best time to make an HDFC home loan prepayment?

Opt for prepayment if you have surplus funds and your loan is relatively new. You will save a maximum of interest on new loans.

Also Read: What is the Best Way to Pre-Close a Home Loan in India?

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