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How Prepayment Interest is Calculated?

Prepayment Interest
Prepayment Interest

Home Loan Prepayment Interest calculation is one of the grey areas from the borrowers perspective. As the average Home Loan tenure in India is 7-8 years therefore Home Loan Prepayment is very common. Borrower prepays Home Loan as and when he/she receives an annual bonus or on the maturity of the past investment. Instances of overpayment, wrong effective date, calculation of Prepayment Interest etc are common points of dispute with the Home Loan Provider. In my post, Home Loan Prepayment – 5 Important Points, i discussed the general points. Based on the feedback/queries of my readers, i decided to write a post on How the Home Loan Prepayment Interest is calculated?

Though the calculation of Prepayment Interest is not a rocket science but the staff of a Bank/HFC fail to explain the same to the borrower. Before we move to Prepayment Interest calculation, it is critical to understand the following points.

1. Monthly Rest: Rest is basically the period at which the outstanding principal amount is calculated by the bank. Though not many borrowers pay attention to this Home Loan Parameter. By default, almost all the Floating Interest Home Loan’s are disbursed with Monthly Rest clause. Only exceptions are some special Home Loan products like SBI Max Gain, Citibank Home Credit, SCB Home Saver, HSBC Smart Home and IDBI Home Loan Interest Saver. The rest for these special products is Daily i.e. Interest is calculated on daily reducing balance.

In short, Monthly Rest implies that Bank will re-calculate the outstanding principal amount for interest calculation every month. Normally this date is 1st of every month. Therefore, we can conclude that Borrower is charged interest on the principal outstanding as on 1st day of that particular month. This date will be considered as the reference date for calculation of Home Loan Prepayment Interest. Any re-calculation of principal outstanding can be done only on this date i.e. 1st of every month.

2. Date of Payment: Another major bone of contention between the borrower and the bank/HFC. In one of the case, i observed that one of the leading HFC considered the date on which the cheque was en-cashed as the date of payment. It is legally wrong. 

“Under the Negotiable Instruments Act, 1881. Subsequent legal interpretation by the Honorable Supreme Court of India, a cheque is an instrument negotiated by delivery. Which implies when the cheque is tendered/deposited, there is a presumption that payment would be realized in due course of time hence the date of cheque deposit is considered to be the date of payment irrespective of the fact when it is actually presented for payment. Date of cheque deposit is considered as date of payment similar to cash payment

In short, if you are depositing a cheque to prepay Home Loan on 15th of the particular month then your date of payment is 15th. Prepayment Interest will be calculated from 1st to 14th of the month.

3. No of EMI’s vs Revised EMI: As i highlighted in my other posts also that at the time of Home Loan prepayment, the borrower has an option to reduce either No of EMI’s or EMI amount. By default, the bank will reduce no of EMI’s but if you would like to reduce EMI amount then you can submit written application at the time of Home Loan prepayment. In this case, your no of EMI’s will be same before and after Home Loan Prepayment. Your Monthly EMI amount will be reduced. Personally, i prefer to reduce No of EMI’s as it will reduce your interest outflow thus reducing the net cost of the property.

4. Date of EMI Debit: Date of EMI debit has no co-relation with the Prepayment Interest. Assuming, my monthly rest or date of re-calculation of principal outstanding is 1st of the month. My EMI is debited on 5th or 10th of the month, but this date has no relevance as such. Normally borrowers get confused and assume that EMI is calculated on the date of EMI debit.

5. EMI is not paid in Advance: This is another major confusion because of which most of the borrowers end up paying an extra EMI. General perception is that EMI deducted in May’15 is for the month of May’15 which is not true. The EMI for April’15 will be deducted in the month of May’15.

Calculation of Prepayment Interest

Let’s check out how the prepayment interest is calculated with an example. Assuming, i am a borrower and my principal outstanding as on 1st May, 2015 is Rs 30,00,000. My Home Loan Interest rate is 10% and EMI amount is Rs 50,000. No of EMI’s due is 84.

Now, during the month i decided to prepay Rs 5,00,000 through cheque towards principal outstanding on 18th May, 2015. In this case, my date of payment will be considered as 18th May, 2015. For calculation purpose, the reference date of prepayment interest will be 1st May, 2015 i.e. date on which principal outstanding was last calculated. Based on principal outstanding as on 1st May, 2015, the interest for the month May, 2015 will be calculated. The EMI of Rs 50,000 for April’15 was debited from my savings account on 5th May, 2015.

If i prepay Rs 5,00,000 on 18th May, 2015 then my principal outstanding will be re-calculated w.e.f 1st May, 2015. In short, principal outstanding will be revised to Rs 25,00,000 as on 1st May, 2015 instead of Rs 30,00,000.  As the date of payment is 18th May, 2015 therefore Bank will charge Simple Interest on the prepayment amount i.e. Rs 5 lakh from 1st May to 17th May (Excluding the Date of Payment). In this case @10% SI, prepayment interest will be Rs 2361. Therefore, i will hand over 2 cheques to the bank

(a) A cheque of Rs 5 lakh towards principal prepayment

(b) A cheque of Rs 2361 towards prepayment interest (Simple Interest)

Bank or HFC can re-calculate the principal outstanding during the month because EMI for the current month is due on 5th of next month. After Home Loan Prepayment, by default no of EMI’s will reduce from 84 to 65. If you wish to retain no of EMI’s to 84 & reduce EMI amount then you can submit written request for the same. Your EMI will be reduced from Rs 50,000 per month to approx Rs 41,750.

To summarize, it is important to understand how the Home Loan Prepayment Interest is calculated. Banks and HFC’s follow different criterion which can be challenged. As the home loan amount is a big liability, therefore, slight manipulation of calculations may cost you few thousand rupees very easily. Home Loan Prepayment Interest will be NIL if you prepay Home Loan on the 1st of the month :)

 Copyright © Nitin Bhatia. All Rights Reserved.

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ketaki
ketaki
9 years ago

Hi Nitin! Thanx for sharing such good information with us.i have a question, hope u may advice. i have a taken home loan fron hdfc with 10.25% which is being reduced this month by themselves to 10.15% now icici people call me to shift home loan as they are offering 9.90% and 0.25% MOD will be charged once. they say whenever RBI will cut down base rate they will reduce it to that extent which hdfc don’t. i m confused and can not decide . pls advice is it a good option.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  ketaki

Please wait for a month or so as there is a strong possibility of another rate cut in June. After that we will decide.

Vinod
Vinod
8 years ago

Hi Nitin Sir,

I am first time availing the home loan, we have identified the property – individual house as it is outside of city limits, it has only Gram Panchayat approvals and no LRS is being provided by the builder and insists to apply for LRS when government notifies about LRS. Builder suggesting to go for home loan with LIC or any other private banks like ICICI, HDFC , General Insurance etc. could you please suggest me any good bank for home loan ?.. which do not charge hidden charges after availing the home loan

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Vinod

You may check with SBI or ICICI Bank.

Priya Pmdd
Priya Pmdd
8 years ago

Is it advisable to take a loan from my Provident fund account at the rate of 4% pa to make a part payment on a home loan of rupees 12 lakhs from ICICI bank at the ROI of 9.85% floating?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Priya Pmdd

You may prepay by taking loan from PF account.

Tanay
Tanay
8 years ago

I have loan from LIC HFL and i am planning to shift to ICICI bank. My EMI is dedcuted on 15th of every month. If ICICI bank does the disbursment on 16th of the month will I get the EMI which I have paid on 15th be refunded and will I be charged EMI from LIC for next month

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Tanay

It depends on EMI period.

prashant
prashant
8 years ago
Reply to  Nitin Bhatia

Sir,
Can I tied up my LIC home loan acct to my HDFC Bank savings acct? Or is there any way i can pre pay outstanding online, periodically.
Thanks

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  prashant

Yes you can link but prepayment is not possible.

Tanay
Tanay
8 years ago

Hello Sir
I had applied for HOME loan transfer at HDFC bank but HDFC bank did not sanction it and the processing fee was dedcuted immediately after submitting docs. Can I get my processing fee back?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Tanay

HDFC Bank does not provide Home Loans. It is by HDFC Ltd. Processing Fees is non refundable.

Kumar
Kumar
8 years ago

I currently have LICHFL loan and wanted to move to either HDFC or AXIS bank. How to choose the best among this

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Kumar

I will prefer Axis Bank.

Yugal
Yugal
8 years ago

Hi Nitin Bhatia,

This query is regarding the home loan i have taken, I have applied for 25 Lakhs loan and taken 19 lakh out of it, however that bank manager suggested that you better take the rest of 6 Lakh as well and use it where ever you want, unfortunately/ fortunately I have taken it and presently as i had no proper plan of where to invest it, I did a MOD of that amount in a Bank which is offering a 8.5% interest on that( and home loan present interest rate is 10.10%) I am not able to judge which is a better option investing the money somewhere or pay it back as a part of pre-payment and save the interest. Kindly help.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Yugal

In my opinion, you should prepay the home loan. I am assuming your home loan interest rate is floating.

bapi mishra
bapi mishra
8 years ago

I have been approved with a home loan of Rs 21Lakh from a reputed financial Society. i am availing this loan to prepay my homeloan with another bank. This society is charging a fractional interest of Rs11450 till my EMI starts. EMI will start in Dec 15. The cheque is dated 10 Nov 15 and they say it’s in their policy to charge interest with effect from date of issue of cheques whereas I believe I should pay interest only from the day the amount is debit from their a/c. I can’t understand why I should pay interest for that period during which I have not availed the loan. What is correct? Can they charge me the interest for that period? what should be the effective date of charging of interest? Thr date of cheque issue or the date when amount debit from their account? What is the policy governing this? Can get a link to this policy? Kindly help

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  bapi mishra

Under negotiable instruments act and subsequent clarification by Honorable Supreme Court of India, Interest can be charged from the date on which the cheque was handed over to you.

Suresh Rajendran
Suresh Rajendran
8 years ago

My wife had some ancestral property which was disposed and got about 8Lakhs.we Have homeloan running with EMI of 38000 per month with bank for one year with 10.1%. Also have Jewel loan pledged for 5Lakhs with low interest rate of 8% as part of agriculture pledge.

What is ur advice on how much to prepay for Bank Home loan & how much to clear the jewel loan?

Pls advise

Nitin Bhatia
Nitin Bhatia
8 years ago

You may clear jewel loan of 5 lac and prepay 3L towards home loan.

Rohitranjan Gupta
Rohitranjan Gupta
8 years ago

Hi Nitin,

I have a housing loan with HDFC Ltd for 16L with a floating ROI 9.65%. It’s 6 month now since I took the loan and I am planning to make a pre-payment. Should I pay 6L now or 3L every 6 months ?

Nitin Bhatia
Nitin Bhatia
8 years ago

You can pay 6L

Renu Mehta
Renu Mehta
8 years ago

Hi Nitin,

A good article. I have a query.

I had taken a bank home loan with Indian Bank with Principal of 4,80,000 for 20 yrs.The monthly EMI was approximately 4500. Now over a period of 13 years, I have been paying extra amount (double the amount) on EMI. Upto last year March 2016,the principal balance is roughly around 150000. Now last 3 months I have payed 30k in each month. I am planning to close my home loan next month. The bank says there would be an interest calculated. What is the interest for? Do I have to pay the interest for remaining 7 years for the prepayment closure?. As i understand there is no clause for early prepayment charges.

Please advise.
Regards,
RENU MEHTA

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Renu Mehta

You have not mentioned whether your home loan is floating or fixed. In case of floating interest home loan there is NO prepayment penalty.

Sarvesh varun srivastava
Sarvesh varun srivastava
8 years ago

Dear Nitin Ji,

I have taken home loan from SBI of 38 Lacs in Aug-13 & RoI was 10.6% at that time. I have taken
one time RoI reduction option by paying Rs 20K & floating RoI is now 9.45%.
My current outstanding is 36 Lacs . I want to make part payment of Rs 5 lacs -& I have two options
1. Either I reduce tenure of home loan
2. Or I reduce EMI amount
Please suggest what should I opt for ?

Nitin Bhatia
Nitin Bhatia
8 years ago

In my opinion, you should reduce home loan tenure.

rockstar85
rockstar85
8 years ago

Hi Nitin, I have home loan of 25L (10 year tenure) from LIC since Apr 2014 at 10.20% – EMI Rs 33477. Recently in May it became 11.45% after fixed period of two years. i paid one time charge Rs 1150 and made the interest written off to 9.95% ( since processing fee comes more for loan switchover i opted this). the O/S amount was 21.63L. now again same month 17th i paid 5L part payment and now the O/S amount is 16.63L .so 16th -10th = 6 days – interest will be taken right ? so the interest extra that i pay for this is Rs 1147.22 ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  rockstar85

Normally EMI is charged for a calendar month. The EMI date is 5th or 10th of next month. In all probability simple interest for 17 days will be charged.

Vishnu
Vishnu
8 years ago

I have gold loan for 4L which is at 7% and Home loan for 3728000 monthly EMI 34825. I have extract 15000 in my monthly budget, Should I need to pay the gold loan, or should need to use the per payment of home loan. Both the loan started less than year..

Please advice..

vishnu
vishnu
8 years ago
Reply to  Vishnu

Which will yield high benfits

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  vishnu

You have not mentioned home loan interest rate.

Vishnu
Vishnu
7 years ago
Reply to  Nitin Bhatia

9.55%

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Vishnu

Just to check whether you are claiming tax deduction on home loan or not and what is your tax slab.

Vishnu
Vishnu
7 years ago
Reply to  Nitin Bhatia

I am claiming tax deduction.. i am in slot 2.
Should need to save the money and get the gold out or put that money in od account of the home which will give more benfits for me.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Vishnu

Prima facie home loan prepayment appears better option.

Avi
Avi
7 years ago

Hello Nitin,
If I have money to prepay the Axis home loan;
1) What is the best time in a month to prepay?
2) If that date is passed, will waiting for the next month is beneficial?
Also can you please explain this with example?
Thanks a lot about this Important article.

Avinash

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Avi

1. You can pay anytime but depending on EMI cycle. You can pay near to your EMI date.

2. No. You should prepay immediately as you will be paying interest for interim period in case you delay.

Kuditim Shiv Kumar
Kuditim Shiv Kumar
7 years ago

HI Nitin,
I have loan balance of 82 lakhs. Pay an EMI of Rs103833 at 10.6^ interest rate.Tenure – 126 months. Is it a wise idea to pay 40 lakhs as prepayment and reduce the tenure. the house is yet to be handed to me and i want to save on interest amount. Please advise.
Thanks,
Shiv

Nitin Bhatia
Nitin Bhatia
7 years ago

Firstly your home loan interest rate is on a higher side compared to market rate. You can pay conversion fees to reduce home loan interest rate.

As you have not received possession therefore you must be paying Pre-EMI interest and not availing tax benefits. Therefore, you can prepay to reduce home loan tenure.

Kuditim Shiv Kumar
Kuditim Shiv Kumar
7 years ago
Reply to  Nitin Bhatia

HI Nitin,

Thanks for the reply. Wanted to add some more information.
I had opted for subvention scheme and infact almost the complete amount was paid by the bak to the builder. The builder paid the EMI for 20 months to the bank and since then am paying the EMI amount( since Sep 2014). the project is delayed by a year. Have not availed the tax benefits as yet to get the house.Will prepay to reduce the loan amount. any comments

Nitin Bhatia
Nitin Bhatia
7 years ago

You may prepay.

Prerna Sachdeva
Prerna Sachdeva
7 years ago

Hi Nitin, We have a Loan with HDFC Ltd and we are thinking of to prepay this amount, If we deposit the cheque with 1st Sept as Cheque date then does it incur any Simple interest?

We are living in USA and we are sending the cheque to India to Deposit the same so we want to know is it fine if we will send only one cheque with prepay amount and deposit it on 1st of Sept.

Also let us know any other document except the prepayment form and authorization letter which should be send.

Also Cheque should be in favour of HDFC Ltd or HDFC ltd(Our loan account number)?

Nitin Bhatia
Nitin Bhatia
7 years ago

You have not mentioned your date of EMI. If the date of EMI is 5th of the month then you need to pay simple interest from 5th Aug to 1st Sep. It is advisable to check with HDFC Ltd on exact amount. They may also demand authorization letter and bank statement for prepayment.

Sudipro Ray
Sudipro Ray
7 years ago
Reply to  Nitin Bhatia

Hi Nitin, am a little confused here. In your article you mentioned that the EMI date does not matter in computing the simple interest. Like in your example, 5th of the month is an inconsequential figure, what matter instead are the dates 1st and 17th. What am I missing here?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Sudipro Ray

If the date of re-calculation of principal outstanding and date of EMI is same then it is important. Some banks re-calculate principal outstanding on date of EMI. In other words, there is NO Grace period.

In the example shared by me in the post, date of re-calculation of principal outstanding is different from date of EMI. The principal was re-calculated on 1st and EMI was deducted on 5th.

Navnit
Navnit
7 years ago

Hi Nitin Sir,

I have a Loan with HDFC Ltd for 40 Lacs for 15 yr tenure ,have taken an under construction Flat under PRE-EMI Subvention Scheme.My builder paid till Oct the Pre Emi and the next EMI will be paid by me from 15th Nov.If am planning to do a Pre Payment of 10Lacs when i Should do the same ?

1) 15th Nov is my EMI Date So before 15th Nov ?
2)How is the Simple Interest Calculated on this ?
3)How much will be the tenure reduced by this amount?

Thanks ,

Navnit

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Navnit

1. You need to check how EMI is calculated in your case. It might be from 11th of the month to 10th of next month and bank might be giving a grace period of 5 days. Assuming it is calculated from 16th to 15th then if you pay before 15th say on 10th Nov then prepayment amount will not be considered for interest calculation for EMI to be paid on 15th
2. From 16th to 10th Nov. Considering the scenario shared in point no 1
3. You may check using EMI calculator available on this site

Navnit
Navnit
7 years ago
Reply to  Nitin Bhatia

Hi Sir,

Thanks for your reply!Yes my First EMI is on 15th Nov.So if I Plan to do part Payment on 6th Nov or 10th Nov HDFC will not charge any Simple Interest as per your reply in point 1?

If we do Part Payment in every 3 months ,to avoid the Simple Interest we should do so before the EMI Date ?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Navnit

1. It is not correct. Your balance outstanding will reduce as of previous EMI date and you will be charged simple interest from previous EMI date till date of payment.
2. To avoid simple interest you can prepay on the date of EMI

Naresh More
Naresh More
7 years ago

Hi sir,

I hv outstanding principle as on 15.11.16 Rs 955439/-. I want to repay full amount. Kotak mahindra bank charge me Rs 32963 prepayement interest (3% of outstandind plus service tax). My EMI date is 08th of every month.EMI amount Rs 12326/-
Also bank charge me revenue for broken period Rs2322/-.

Is it payable as per rule? & if yes what is rate of interest difined. is it worth to wait upto next EMI date to avoid prepayment interest?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Naresh More

It seems your home loan is fixed interest home loan. Please confirm.

Naresh More
Naresh More
7 years ago
Reply to  Nitin Bhatia

Sir,

Its Floating type Loan against property. My Home Loan account also exist with same bank

Naresh More
Naresh More
7 years ago
Reply to  Naresh More

Sir,
it is Fixed rate of interest for 3 years.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Naresh More

If you prepay during fixed interest period then bank can levy prepayment penalty i.e. 3% in your case. You have not mentioned when you availed home loan. If possible, you should wait till your home loan is fixed interest. Once it shifts from fixed interest to floating then you can prepay without any penalty. But it require financial calculation whether it is worth waiting or not.

Naresh More
Naresh More
7 years ago
Reply to  Nitin Bhatia

Thank you very much sir for your suggestion. Loan availed on 20.01.2015

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Naresh More

Prepayment penalty will be applicable till 19.01.2018 As i suggested, you have to do financial calculation whether it is beneficial to prepay or not.

harendra tiwari
harendra tiwari
7 years ago

Nitin Bhatia Sir,
I am planning to avail home loan 30L from HDFC Bank for 30 years. I will prefer to pay some amount during loan tenure.
So My question is that is there is any pre-approval needed during applying loan to avail pre-pay scheme?

Thank you.

Nitin Bhatia
Nitin Bhatia
7 years ago

You may apply for pre-approved home loan. Also apply for floating interest home loan. There is no prepayment penalty under floating interest home loan.

harendra tiwari
harendra tiwari
7 years ago
Reply to  Nitin Bhatia

pre-approval is must for prepayment ? Please suggest me.

Thanks for your advice.
– Harendra

Nitin Bhatia
Nitin Bhatia
7 years ago

No

CK
CK
7 years ago

My Loan is with LIC HFL. OT as of today is 2474903 and after 7th of Jan 2017 EMI Cut, it will be 23,54,099. After Jab payment, I will have 18 more EMI’s. I pay EMI :Rs141100. The interest rate type is floating with IR:9.95%. I will be issuing a cheque for partial payment on 25th Jan for 10lac. How much would be the outstanding after this payment? I will keep the EMI same after this payment and the tenure will come down. Also I have plans to clear off loan on May 11th 2016. How much would I have to pay to LIC at that time? Please let me know. I need the Appx numbers.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  CK

You may download EMI calculator available on my website for calculations.

CK
CK
7 years ago
Reply to  Nitin Bhatia

I went thru EMI-Calculator1 excel in your website and it works like a charm. You are just awesome. Thanks

Rajesh Soni
Rajesh Soni
7 years ago

Hi Nitin,

Recently I have shifted my home loan HSBC to another bank. In full & final, HSBC charged the interest for additional 3 days (post depositing the cheque). Now I am asking them to refund the excess amount. When I have quoted the above argument (mentioned in point 2. i.e. “Date of Payment”), they are saying that they did not find anything which substantiate that “date of cheque deposit” should be assumed as “date of payment”. Could you please help me in finding the backup of Supreme court case judgment.
Regards,
Rajesh

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Rajesh Soni

You may refer the relevant clauses under Negotiable Instruments Act, 1881 and will get the supreme court judgement online on the official website.

Mayur
Mayur
7 years ago
Reply to  Nitin Bhatia

Dear Nitin, tried searching a judgment describing this aspect, but couldn’t find. Could you kindly post any more information (title / date / url etc) of the judgment? I am struggling convincing SBI about honoring a demand draft on the date of deposit. In fact they said it would take at least 10 days to honor it.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Mayur

As i am not a lawyer therefore i don’t have these details.

Manish
Manish
7 years ago

I have taken a loan from HDFC in the year 2004 for an amount of Rs. 6, 50, 000 at Floating Rate of Interest. Now my EMI has been fixed at Rs. 11, 400/- from this month onwards for the rest period of 18 months. My EMI payment date is 25th of every month. I want to prepay the entire amount. How much amount I have to pay.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Manish

You may check with HDFC Ltd.

parth verma
parth verma
7 years ago

Hye Sir,

My Father was a civil servant and he took a home loan from the SBI in 2011. The amount was 25,00,000. His EMI was 30,000 and therefore i think it was based on fixed ROI. He passed away last year while in service and we decided to prepay the full amount of loan from the money we got from the govt like Death Gratuity, PF etc. I enquired in the branch where his salary account was functioning and they said that around 21,00,000 is the balance that we have to pay and if we prepay then we will be paying interest upto that date itself and hence the burden will be less than 21,00,000. But when i enquired the same with the branch from where home loan was taken, they said we have to pay full 21,00,000. Infact they increased the amount by some extra 30000.

We are confused with this. We will have to pay the principal amount plus interest upto that date, right? They said that interest for whole period will be charged.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  parth verma

You may ask for home loan closure letter and amortization schedule from the bank. It will clarify your doubt. The interest is charged only till the date of Home Loan closure.

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