To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday
I took a home loan from HDFC at 11% adjustable interest in July for 180 equated monthly instalments (EMIs). The loan amount is Rs19.25 lakh. I have paid EMIs till February. I want to prepay part or all of the loan amount. What is the maximum amount I can prepay without any charges/fees? Also, when can I pay back all amounts without any charge?
Since you have taken the loan at an adjustable rate of interest, generally, you have the option of prepaying it partly or fully at any given point in time without having to pay any prepayment charges. However, in case the loan prepayment is being refinanced from another institution, then a prepayment charge of 2% will be levied on the amount being prepaid. We follow this practice at HDFC. However, you should check with your loan provider.
I purchased my first property through a home loan. At the time of disbursement, I was told to pay a pre-EMI and stamp duty on the loan processing amount. I was not made aware of both these charges until the last minute, despite repeated inquiries about the charges involved. Are there any consumer safeguards regarding transparency? What would you do if you were in my shoes and there was no response to your queries? About pre-EMI, I was told that my pre-EMI was because the EMI cycle starts on the 1st of the month, whereas I took the cheque in the middle of the month.
First, you need to understand that pre-EMI is not an additional charge. It is the interest you pay for availing part of the loan amount to pay the seller. Hence, you are charged a simple interest rate for the period you use the amount until your EMI commences.
Usually, most financial institutions mention this in their loan brochure/application. As for the stamp duty that you have paid on the loan processing amount, it is as per government regulations—whereby a certain percentage on the total loan amount is charged as stamp duty. This percentage can vary from state to state; for instance, in Maharashtra, the stamp duty is 0.1% of the total loan amount.
With regard to your query on the grievance redressal system, most institutions have call centres to address customer queries. You may also visit their website and lodge a complaint with the authorities or directly write to the regulator of the bank or housing finance institution.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to firstname.lastname@example.org