Loan Against Property Prepayment Charges: What You Need to Know
Prepayment charges on a loan against property are fees imposed by lenders when borrowers pay off their loan before the scheduled tenure. These charges depend on factors such as the type of interest rate (fixed or floating), the lender’s policy, and the loan agreement terms. For floating-rate loans, RBI regulations often exempt individual borrowers from prepayment penalties, while fixed-rate loans may attract a fee ranging from 2% to 5% of the outstanding amount. Understanding these charges is essential to assess the financial impact of prepayment and decide if it’s a cost-effective way to reduce your debt burden.