After the news of waiving prepayment penalty by housing finance companies now banks have also started to in line with housing finance companies. Some of the banks have already waived off the prepayment penalty on home loan on floating rate.
Banks charge prepayment penalty to recover the cost which falls on them due to mismatch of assets and liability on prepayment of loan amount by the borrower. But as per the advise of Reserve bank of India (RBI, banks are now waiving off the charge and finding some alternative to recover the cost.
Few banks like State bank of India (SBI), Bank of India (BOI), Axis Bank, and United Bank of India (UBI) have already waived of the charge from the customer. Which means existing or new customers of the these banks can make pre payment of their home loan on floating rate at free of cost.
Penalty On Prepayment Of Home Loan
|Axis Bank||No Prepayment Charge|
|Bank Of Baroda||2 %|
|Bank Of India||No Prepayment Charge|
|ICICI Bank||2 to 4 %|
|Punjab National Bank||2 %|
|State Bank Of India (SBI)||No Prepayment Charge|
|Standard Chartered Bank||2.5 %|
|Union Bank Of India||2%|
|United Bank Of India||No Prepayment Charge|
Few banks are planning to take the decision to waive off prepayment charge from home loan borrowers. Out from the above list of banks, few banks have removed the charge only from floating rate loan whereas some banks have removed the same from both floating rate and fixed rate loans.
State Bank Of India (SBI)
Floating Rate Loan :- No prepayment penalty.
Fixed Rate Loan :- Prepayment penalty will continue.
Floating Rate Loan :- No Prepayment penalty.
Fixed Rate Loan :- No Prepayment penalty.