Part payment of Home loans during tenure

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Hello Sir,I had availed an Home Loan for Rs.21,00,000/- and had paid 2 years of EMI. As per my loan offer, the interest rate is about to increase now. I would like to consider the option of re-paying some amount in bulk which I can.My query is, will this amount apart from the regular EMIs that I pay, will be adjusted towards the princial part or the interest part of the loan. The outstanding amount on my loan now is Rs.20,00,000/- and if I pay around Rs.1,00,000 now, will my outstanding amount on my loan come upto Rs.19,00,000/-. Are there are any other policy which has to be taken care in considering this option. I had inquired with the bank and there are no any charges for paying such amounts in the middle of the loan tenure. However I am doubtful of the policy term that they had explained.Thanks,Aravind

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Tags: asked February 6, 2012
Aravind
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2 Answers

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The amount that you pay as partial prepayment towards the home loan will be adjusted against the outstanding loan principal. Normally the bank may reduce the home loan tenure by keeping the same EMI, however on your request they can reduce the EMI also and keep the tenure same.
Nikolai Kirtikar
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Incidentally if the increased rate is more than 10.50% p.a. then you should wait till the floating rate period starts and then switch your loan to another lender @ 10.50%. You will not need to pay any pre-payment charges if your existing lender is an housing finance company (such as HDFC Ltd. , LIC Housing Finance, etc. ) or any of the leading banks such as ICICI , SBI or Axis bank. The new lender is also likely to be willing to waive the processing fee also. Which means there will be no cost for shifting. You can ask for a lower loan amount while shifting ( and using your surplus to pay off the balance amount to the existing lender) thus reducing your overall burden. You can use this link for applying for a home loan transfer (http://www.apnapaisa.com/loan/home-loan-india/compare.html)
Harsh Roongta
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