I understand that as per RBI circular on June 2012, foreclosure charges on prepayment of home loan is abolished. But apparently there is some fine-print to it which I cannot fathom. Please clarify :
1. I have taken a home loan account with a bank as on 2004.
2. I topped up the above loan on 2006.
3. The earlier loan taken on 2004 is closed and the a new loan was made effective as on Aug 2006.
4. On August 2013 I decided to foreclose the above loan and applied for a foreclosure statement.
5. The bank provided me a foreclosure statement which included pre-payment charges.
6. When I queried the bank on the pre-payment charges (which is abolished by RBI) they said it is valid and provided the following explanation : What I have taken is Home Loan Enhancement and not Home Loan. And hence the prepayment charges apply.
7. I dont understand the difference between Home Loan and Home Enhancement Loan - for all practical purposes both are same. The only thing I did is take an top-up on the original loan amount sanctioned.
Can any of the expert clarify whether the stand taken by the bank is correct ? Or they are just escaping on fine-print ?
Thanks and regards,
Sivakumar
