r2i forum

I like to pay off my home loan as I have variable rate - 11.75%.

But, ICICI, gave a shocker with following response -

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You can foreclose your loan by paying 2% charges on the outstanding amount of your loan at the time of foreclosure and the amounts prepaid in the last one year, if any + 12.36% service tax applicable.

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any comments? Any way to avoid the penalty.

This may not be applicable to your case, but some banks let you pre-pay an amount less than the full balance of the loan with little or no penalty. Let's say you have a 20 lakh loan, you may be able to pay 19.5 lakhs first with minimum penalty. Then, you "foreclose" the remaining 0.5 lakh with another payment and pay the penalty on that amount. I don't know if this is true for your loan, but it is worth checking.

The best thing about home loans in India is to make sure you don't have a pre-payment penalty when you sign up. They usually charge you a quarter point higher, but if you are planning to pre-pay soon, it's definitely worth it.

You cannot pay for first 6months of the loan, after that you can pay any amount a maximum of 4 installments in a year. There is no peality for that.

One another thing is, the staff in ICICI are poorly informed, so try chasing with someone else, they'll give u a better idea.

good luck!

This is what I was also thinking and have read about doing the same in the past. But, I think ICICI wisened up and have it covered with this...(and the amounts prepaid in the last one year)...maybe you could pay most of it and then wait one year to close it? Your best bet would be to talk to an insider(ICICI bank employee) personally to find a way out;.

bengal_tiger;52019This may not be applicable to your case, but some banks let you pre-pay an amount less than the full balance of the loan with little or no penalty. Let's say you have a 20 lakh loan, you may be able to pay 19.5 lakhs first with minimum penalty. Then, you "foreclose" the remaining 0.5 lakh with another payment and pay the penalty on that amount. I don't know if this is true for your loan, but it is worth checking.

The best thing about home loans in India is to make sure you don't have a pre-payment penalty when you sign up. They usually charge you a quarter point higher, but if you are planning to pre-pay soon, it's definitely worth it.[/quote]

Thanks ... looks like I have a 'workaround' :emwink: here.

I have a loan of 20 lakhs. Monthly EMI is about 20,000.

Now, i.e., this month pre-pay 19 lakhs. Then, after one year, pay off the remaining one lakh and foreclose the loan. This way I can only pay penalty for one lakh. Per ICICI, there is no penalty on those amounts which were paid before one year.

Does this work ?

bengal_tiger;52019This may not be applicable to your case, but some banks let you pre-pay an amount less than the full balance of the loan with little or no penalty. Let's say you have a 20 lakh loan, you may be able to pay 19.5 lakhs first with minimum penalty. Then, you "foreclose" the remaining 0.5 lakh with another payment and pay the penalty on that amount. I don't know if this is true for your loan, but it is worth checking.

The best thing about home loans in India is to make sure you don't have a pre-payment penalty when you sign up. They usually charge you a quarter point higher, but if you are planning to pre-pay soon, it's definitely worth it.[/quote]

Looks like it should work. But, you never know until you do it.

Also, CNU was saying...
you can pay any amount a maximum of 4 installments in a year.

If that is the case, then you will only be able to prepay 80k(4x20K) and not 19 lacs in a year.

venkat786;52023Thanks ... looks like I have a 'workaround' :emwink: here.

I have a loan of 20 lakhs. Monthly EMI is about 20,000.

Now, i.e., this month pre-pay 19 lakhs. Then, after one year, pay off the remaining one lakh and foreclose the loan. This way I can only pay penalty for one lakh. Per ICICI, there is no penalty on those amounts which were paid before one year.

Does this work ?[/quote]

You can prepay 4 times a year. With the minimum prepayment=2 x EMI.

You can prepay till the last 12 EMIs are remaining.

So 12 x EMI = Principal+interest for the last 12 EMIs cannot be altered. A foreclosure at this stage will warrant penalties (2%+ST) on the remaining principal and the prepaid amount.

Double check the above...this is what I was told.

Hi All,
I've a home loan of 25 lacs with icici and a floating rate and the EMI keeps on increasing currently at 294xx :(..so I've decided to do pre payments and foreclose.
One of my question is already answered. But I've a bigger concern/ question: as per my current amortization schedule icici has cut only interest rate and most of the principal amount remains( around 24.x lacs) . So when I pre pay do I need to pay the whole principal amount ? coz I've already paid around 12.6 lacs in EMI already..?
Will ICICI do a recalculation? coz, paying 12.6 lacs+ 25 lacs is ridiculous just for 4yrs? pls let me know who have gone through a similar process/ situation?

Regards.