Home loans are a popular option for individuals looking to purchase a property. With State Bank of India (SBI), you can avail of a home loan with flexible repayment options and competitive interest rates. However, if you have taken a home loan from SBI, you may have considered prepaying your loan. Prepayment of a home loan means paying off part or all of the outstanding loan amount before the due date. This can help you save money on interest and close your loan sooner. In this blog, we will discuss the steps for SBI Home Loan Prepayment Online using the internet banking portal and how prepayment works in case of home loans.
SBI Home Loan Prepayment can be done easily and conveniently through the internet banking portal.
Here are the steps to follow:
It is important to note that SBI may charge a preclosure penalty, which is a fee for early repayment of the loan. This fee is calculated as a percentage of the outstanding loan amount and may vary based on the loan amount, interest rate, and the tenure of the loan.
To calculate the preclosure penalty, you can use the following formula:
Preclosure Penalty = Outstanding Loan Amount X Prepayment Penalty Rate
Where Prepayment Penalty Rate is the rate specified by SBI for early repayment of the loan.
Prepaying your SBI Home Loan can have several benefits:
Save on Interest: The longer you take to repay your loan, the more interest you pay. By prepaying your loan, you can save on the interest amount and reduce the overall cost of your loan. Let's take an example to understand this better.
Additional Info: Also check SBI Home Loan EMI Calculator
Suppose you have taken a home loan of Rs. 50,00,000 with an interest rate of 8% p.a. and a tenure of 20 years. The EMI for this loan would be around Rs. 41,794. The total interest paid over 20 years would be approximately Rs. 44,44,142. Now, if you prepay Rs. 10,00,000 after 5 years, your outstanding loan amount would be reduced to Rs. 40,00,000, and the interest payable would come down to approximately Rs. 36,06,777. As you can see, prepaying your loan can significantly reduce the interest paid over the life of the loan.
Close your Loan Sooner: By prepaying your loan, you can close it sooner and become debt-free sooner. For example, if you prepay Rs. 10,00,000 after 5 years, your outstanding loan amount would be reduced to Rs. 40,00,000, and the remaining tenure would be 15 years.
Improved Credit Score: A timely repayment of your loan can improve your credit score and make it easier for you to take loans in the future.
SBI Home Loan Prepayment or Preclosure can be done quickly and easily through the internet banking portal. Customers can save on interest by paying off their loans earlier and avoid paying a preclosure penalty by checking the terms and conditions beforehand. If you have any questions about SBI Home Loan Prepayment Online, you can contact the SBI customer support team for assistance.