A great news for all home loan customers. The National Housing Bank (NHB), the regulator of housing finance in India has issued notifications on housing loans. As per the latest notifications, all the registered housing finance companies (HFCs) have been asked not to levy any pre payment penalty on housing loans. NBH has also asked HFCs to ensure that all borrowers pay the same interest rate irrespective of when the loan was taken.
The National Housing Bank (NHB) has directed all the registered housing finance companies (HFCs) in the country to stop charging pre payment penalty from the home loan borrowers under the following conditions.
- Where the housing loan is on Floating Interest Rate basis (pre closed through any source).
- Where the housing loan is on Fixed Interest Rate bases (pre closed through his own sources).
Here “own sources” means any source other than by borrowing from a Bank/HFC/NBFC and/ or a financial institution.
As directed by NBH, in case of fixed rate home loans only those borrowers who pay back loan from their “own sources” will be exempted from pre-payment charges. Which means if borrowers pay back the loan amount from another bank or HFC, the penalty will be applicable.
However, this notification will be beneficial only for about a third of the Rs 5 lakh crore housing finance market as Reserve Bank Of India (RBI) has still not notified any such norms for banks.
On uniform interest rates, the NHB has asked HFCs to ensure uniformity in interest rates on floating rate basis, charged to their old and new customers, with the same risk profile irrespective of the time of entry of borrowers in the market.