Do we need to pay foreclosure charges on switching loan?- Property Hotline

Expert: P V Subramanyam, Home Finance Expert.

Question: I had taken a home loan of Rs 1.51 crore from Bajaj finance at 10.57 % rate of interest (ROI) about 2 years earlier. I have taken the possession of my flat two months ago. With the rate cuts happening, other banks are offering me a lower ROI. I want to ask if I switchover my home loan to other banks, will I have to pay foreclosure charges? What I know that is if as an individual, I have taken a home loan, the banks and NBFC both cannot charge foreclosure.

Answer: When you try to switch the loan to other bank they charge you the documentation charges or one time processing fee etc. You need to calculate these charges and figure whether it’s worth shifting the bank because you are going to pay some processing here as well as in the new bank. Add up all the cost and see atleast there is 1.25% advantage. There is no as such called foreclosure charges.

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