Banking leader State Bank of India dropped ‘prepayment charges on all its loans over the past fortnight.
The announcement coincided with the hiking of the bank’s base rate and withdrawal of the controversial
teaser home loan schemes. With the SBI taking the lead, other banks are now expected to follow suit and
withdraw the controversial penalty in the days to come. Most banks and home finance institutions charge a
prepayment penalty in the range of 1 per cent to 2 per cent in the event of a customer opting to close the
home loan prematurely. Public sector banks generally charge about 1 per cent or less of the loan outstanding
as prepayment penalty, while it can be anywhere between 1-3 per cent in private banks. In many cases, banks
do not charge any prepayment penalty if you prepay using your own sources. May 2nd 2011, Indian Realty News
The announcement coincided with the hiking of the bank’s base rate and withdrawal of the controversial
teaser home loan schemes. With the SBI taking the lead, other banks are now expected to follow suit and
withdraw the controversial penalty in the days to come. Most banks and home finance institutions charge a
prepayment penalty in the range of 1 per cent to 2 per cent in the event of a customer opting to close the
home loan prematurely. Public sector banks generally charge about 1 per cent or less of the loan outstanding
as prepayment penalty, while it can be anywhere between 1-3 per cent in private banks. In many cases, banks
do not charge any prepayment penalty if you prepay using your own sources. May 2nd 2011, Indian Realty News
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