Are prepayment charge applicable on plot loans at floating rates?
I took a residential plot loan at floating rate from HDFC about 6 years back . I'm now doing a balance transfer to another bank , but HDFC tells me that since it is a plot loan and there has been no construction on the plot , they will charge me a prepayment share (2%).
As I understand both RBI and NHB had issued orders not to charge prepayment charges for home loans on floating rate, but HDFC tells me it is not valid for plot loans. Please help with the correct advise.
Answer
In case of ADJUSTABLE RATE HOME LOAN [ARHL] and DUAL RATE HOME LOAN [DRHL], during the period of applicability of the variable rate of interest no prepayment charges shall be payable for partial or full prepayments irrespective of the source.
However, for Plot Loans, no prepayment charges are payable if the prepayment is made within 3 years from the date of first disbursement of the loan, but in case the prepayments is made after 3 years from the date of first disbursement the same shall bear a prepayment charge of 2% of the amounts being so prepaid if the house is not constructed. HDFC shall seek proof of completion of house construction as deemed appropriate.
As your loan tenure has exceeded 3 years (6 years as mentioned by you), the foreclosure of the same would attract applicable prepayment charges.
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