Time to Prepay your Home Loans
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After the Reserve Bank of India hiked the cash reserve ratio (CRR) from 8.75% to 9%, there has been a quantum jump in the number of home loan borrowers approaching banks for foreclosures and partial repayments.
Yes, it is very painful for borrowers to see all their repayments going as Interest and very little of it going into “Principal” So it is always better to prepay and take the pain in your stride. As they say that if you want to teach your kids about personal finance, show them what is poverty. So let’s take this as an education for your management of money!!
According to industry estimates, the number of home loan borrowers making foreclosures and partial repayments has almost shot up by 20-25% during the past few weeks. These borrowers are typically the ones who have taken floating loans in the last 12-18 months and are now trying to make balloon payments through their salary bonuses. Floating rates account for 90 % of the India’s home loan portfolio.
