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The Home Loan part-prepayment process involves paying off the remaining loan amount and the interest accrued on the loan till the date of repayment. Home Loan prepayment helps a borrower save the interest that must be paid to the lender and develop a good credit profile for future borrowing instances.

The Home Loan prepayment usually includes foreclosure charges apart from the remaining principal amount and the interest till date. Generally, foreclosure charges may range form 2-5%, depending on the lender. However, Bajaj Housing Finance doesn’t charge any foreclosure or part pre-payment charges.

There are two kinds of prepayments that are accepted by lending institutions.

Partial Prepayment

Partial prepayments only pay off a part of the  Home Loan and not the entire loan amount. It is not unusual for lending institutions to accept amounts equivalent to 3 Equated Monthly Instalments (EMIs) as partial prepayment. However, the borrower is free to increase the amount paid as prepayment if they so desire. Many advise borrowers to make a partial prepayment whenever they have a cash surplus, so they can reduce their EMI load, and can save more on their Home Loan.

Complete Prepayment

A complete prepayment leads to the transfer of the said property in the name(s) of the borrower(s) and relieves the borrower(s) from any financial or legal liability vis-à-vis the Home Loan, before the end of their official repayment tenor.

At Bajaj Housing Finance, you can initiate the process of prepayment right after the clearance of the first EMI. We charge zero part-prepayment and foreclosure fees for individual borrowers. Many other lenders however have a lock-in period – a duration during which borrowers are charged a fee if they opt for prepayment. After the lock-in period, the borrower is free to opt for prepayment. Note here that according to RBI guidelines, floating loans should not have lock-in periods.

Prepayment is a non-complicated process but requires you to be well-informed in advance. Here is how you can go about if you decide to part-prepay or foreclose your Home Loan.

  1. Inform your lender in writing beforehand about your willingness to prepay the loan.

  2. You can prepay an amount that is at least 3 times your EMI or more.

  3. If you are foreclosing the loan, you can request back your official documents and unused cheques from the lender along with a NOC clearing you from any outstanding dues. Another NOC must be availed by the lender stating that both parties - the lender and the borrower - have duly agreed to pay off the loan.

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