Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?????

Discussion in 'Money Matters' started by Sanjithra, Nov 23, 2011.

  1. Nov 23, 2011 #1
    Sanjithra

    Sanjithra Bronze IL'ite

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    Hi all...

    I am a silent reader of this forum and I have been able to relate to several of our IL's problems with my real life. Now, I am badly in need of suggestions from you all .

    I have a home loan with LIC Housing Finance Limited for 28 lakhs for a 3 BHK flat in Chennai. Now, I am selling that flat and the person who is buying it, is also getting a home loan from LIC for 25 lakhs. So, the business is not going from LIC to any other bank. Instead, the loan is going to be with LIC only for the same property. But, when I got the outstanding statement, I was subjected to a rude shock. They have charged me 60K extra ( 56K pre-payment penalty + 4K service charges, edu. cess etc.,) :drowning. RBI and National Housing Board have issued a directive stating that for Home Loans with Floating rate of interest, they are not supposed to charge the custmers with pre-payment penalty. Still LIC HFL does it. Waht does this mean?:thumbsdown???? When RBI hikes the rate of interest, the banks and housing finance companies do it with immediate effect. But, when it comes to lowering the interest rate or implementing the pre-payment penalty waiver, they dont !!!!!!!!!!!! Ridiculous. Poor Indian Home Loan Borrower !!!!!!!

    When I enquired the LIC HFL contact person, he says only the Head Office knows about all that. I told him that I am ready to talk to any of their Head Office Manager/Staff. But no response. When I had been to the office 6 months back, I noticed that a lady staff had brought her cousin and he went for a pre-closure of the loan without any penalty. :spin (even before the RBI's directive)... How many ever Anna Hazare's come, our govt organizations wont budge is it ???????

    Literally, I am very furious now. I want to take it up legally...Please guide me how to go about it. 60K of hard earned money going down the drain.......:bang


    To all IL's I would like to tell the lessons I learnt from life...

    1) Never get home loan for such a high amount ( 20 L - 22 L should be the limit).

    2) Try to go for fixed Rate(even if it is slightly higher than the current floating). I got the home loan for 8%. Now it is 12%. I am paying 28K as EMI every month. Out of which only 800 goes to Principal and 27200 to Interest)
    Mere waste of money.

    3) Never go for buying a home for tax benefit alone. (Its going to be just additional 4K tax benefit, which you get from the home loan interest).

    4) If you have done all the above, atleast try to do prepayment every month and close it soon. ( I was not able to prepay, as I resigned during pregnancy and had to spend a lot during my pregnancy.)

    5) I dont think its worth buying a flat for 40 Lakhs, which is just going to fetch the UDS-worth money in future. Instead, invest in land. I prefer to stay in a rented house paying 8K rent, instead of paying 28K EMI. Atleast I can invest the rest 20K in good savings instruments.

    Dear IL's ....please correct me if I am wrong. I am losing my peace of mind... :bowdown
     
    Sanjithra, Nov 23, 2011
    Sanjithra, Nov 23, 2011
    #1
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  2. Nov 23, 2011 #2
    sushmavja

    sushmavja Platinum IL'ite

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    Re: Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?

    i was thinking all the banks have removed the pre-closure charges except icici n hdfc.even hdfc i have heard from a friend that they are not charging if we have paid the loan for min of 3 yrs.and icici doesnt charge if we pay emis for 12 months after making pre-payment.i have no idea about lic hfc.in case of banks you can approach the banking ombudsman and the details are to be given in every branch of banks.you may check if you can put this in ombudsman
     
    sushmavja, Nov 23, 2011
    sushmavja, Nov 23, 2011
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  3. Nov 23, 2011 #3
    Shanvy

    Shanvy IL Hall of Fame

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    Re: Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?

    Sanjithra,

    From the little i know, you can pre-pay around a certain lakh of rupees towards the loan which is not penalised. i was told around 5lakhs i think..not sure. and after that you need to show the source of inflow this in case of a nri. and i think the same holds good for a resident. If you have seen somebody pay without a pre-payment penalty and have proof of that, do cite that to the officer..but again how much a risk you are willing to take is where it all ends..it takes a month to get the document after you close the loan

    the rate of interest are not fixed in almost any of the bank..if at all the fixed concept is there it is only for the 1/2/3 years and then it is converted to floating..and when you move to floating, then the number of months/term increases rather than your emi unless you ask for an increase in the emi.. so imagine a person who is 45 takes a loan for 10 years at 8% but with the increase in rates his tenure could move to 12 or 15..(for the sake of explanation)..he is around 60. or let us say 70 if he takes for 20 years.. so where do you think the person can pay from at 70..so i was told the banks have to have a cut-off at atleast 60 and then the emi is increased.

    and a small amount only goes towards the principal..and did you imagine the banks are running a charity by giving us loan..(not to hurt you ). we borrow because we do not have..and you are to read the fine prints before signing on the dotted line.

    again the pros and cons on re investment and the return on investment is another debate..
     
    Shanvy, Nov 23, 2011
    Shanvy, Nov 23, 2011
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  4. Nov 23, 2011 #4
    Shanvy

    Shanvy IL Hall of Fame

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    Re: Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?

    The Hindu : Life & Style / Homes & Gardens : Pre-closure charge on housing loans set to go

    the articles shows why you may be levied a charge..
     
    Shanvy, Nov 23, 2011
    Shanvy, Nov 23, 2011
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  5. Nov 23, 2011 #5
    Sanjithra

    Sanjithra Bronze IL'ite

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    Re: Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?

    Hi Shanvy,

    "Floating-rate loans can be pre-closed through money raised from any source, the directive says."

    I have a floating rate loan, which I am pre-closing by selling the house. Which means the money from the sale implies i am paying the loan from my source. Moreover, they say for Floating rate, the money can be from any source.

    So, on what basis are they charging this penalty now ?
    .
     
    Sanjithra, Nov 23, 2011
    Sanjithra, Nov 23, 2011
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  6. Nov 23, 2011 #6
    Shanvy

    Shanvy IL Hall of Fame

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    Re: Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?

    talk to lic..housing board..you can check out the one at abdul razzak road(?) saidapet, which is the back office for payment and closure i think..
     
    Shanvy, Nov 23, 2011
    Shanvy, Nov 23, 2011
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  7. Nov 23, 2011 #7
    shaishav

    shaishav Silver IL'ite

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    Re: Inspite of RBI and NHB's directives Pre-payment Charges are levied !! What to do?

    Hi Sanjithra,

    I have a simple suggestion. Please write to the banking ombudsman. Please refer this link Reserve Bank of India

    Also tell your bank or housing loan company that you are/have written to the ombudsman.

    I am not keeping a track of the policy changes so I am not sure if this implemented or still to be implementes. But, if you are sure...Please go ahead and write to the ombudsman.

    Regards,

    Shaishav
     
    shaishav, Nov 23, 2011
    shaishav, Nov 23, 2011
    #7

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