Home loan prepayment

Home loan prepayment at all banks has been made free, a customer can prepay his loan at any time without paying any additional charges.

There are 2 ways of prepaying a Home Loan.

· Reduce the principle Outstanding

· Reduce the tenor

For example if you were to take a 20 year tenor on your home loan and plan to prepay 5Lks that you have in surplus cash, you can pay it against reducing your principal to 65Lks from 70Lks or reduce your tenor from 20 years to 19 years (Approximately)

If you foresee that you will have a steady inflow of cash its always advisable to explore the Home Credit/Home Saver products that are offered by Citi/StanC/HSBC and SBI where in the bank will open a current account and link it to you home loan account and any surplus cash that you maintain in the current account will be adjusted against the interest of your home loan.
the interest earned through FD is taxable unlike the interest adjusted against the Home Loan in this product which not only ensures a higher Return on investment but also reduces the interest outflow on your home loan ensuring that the loan is foreclosed faster.

You can check out the calculator from Citi Bank online.

http://www.online.citibank.co.in/products-services/loans/pop-up/mortgages-calc.htm?eOfferCode=INHLHLNAVHCF