Part-Prepayment and Foreclosure – Charges, Rules, Advantages and Characteristics

Managing a part-prepayment becomes easier when you have the flexibility to repay on your own terms. Two of the most useful features that help borrowers take greater control over their loan journey are part-prepayment and foreclosure. Understanding how these options work can help you plan more effectively and make the most of your repayment strategy. 

Part-Prepayments and Foreclosure: Overview

Part-prepayment and prepayment are ways to repay your loan faster than the scheduled timeline. They offer flexibility by allowing you to contribute additional amounts toward your loan when you have surplus funds. 

• Part-Prepayment: Making a lump-sum payment toward your outstanding principal, over and above your regular EMIs. 
• Closure: Repaying the full outstanding loan balance before the end of the loan tenure. 

What is Part-Prepayment?

Part-Prepayment is when you pay a portion of your principal before it is due, which reduces your overall liability. This helps bring down either your future EMIs or loan tenure, depending on the lender's terms and your preference. 

What is Foreclosure? 

Foreclosure refers to the full repayment of your loan before the agreed term ends. You can choose this option if you have the funds to clear your dues ahead of schedule. 

Why Consider Prepayment or Foreclosure?

These repayment options offer several long-term advantages: 

• Faster loan closure 
• Reduction in total interest paid 
• Lower financial commitment over time 
• More peace of mind with fewer EMIs in the future 

They also provide greater control over your finances and the flexibility to align repayments with your income cycles or windfalls like bonuses. 

Prepayment and Foreclosure Charges

Individuals with Home Loans under floating interest rates can prepay or close their loan early without incurring extra charges. To know more about prepayment and foreclosure charges on a Home Loan, click here. 

How Does a Home Loan Part-Prepayment Calculator Work?

A prepayment calculator helps you estimate how your extra payments will impact the total loan cost and duration. Simply input your outstanding loan amount, prepayment amount, interest rate, and tenure, and the calculator shows the new EMI and revised tenure based on your prepayment choice. You can choose to change your EMI or tenure, basis a discussion with the lender.  

Using part-prepayment or foreclosure strategies can ease your Home Loan journey. They are simple steps that can help you plan your finances to repay the loan sooner.