Foreclosure
Repaying the entire outstanding loan balance before the end of the tenure.
Apply for a LoanWhat is Foreclosure?
Loan foreclosure (also called preclosure or early closure) means paying off the entire remaining outstanding loan balance — principal and accrued interest — in a single payment before the loan tenure ends. This closes the loan account permanently. For floating rate home loans, RBI has prohibited foreclosure charges since 2014. Foreclosure saves all future interest that would have been paid over the remaining tenure.
Example
₹25 Lakh home loan, 20 years tenure, 8.5% rate. After 5 years, outstanding principal ≈ ₹22 Lakh, remaining interest for 15 years ≈ ₹19.5 Lakh. Foreclosing now by paying ₹22 Lakh saves ₹19.5 Lakh in future interest.
Frequently Asked Questions
Are there charges for foreclosing a home loan?
For floating rate home loans from banks and NBFCs, RBI has banned foreclosure charges since 2014 — you can pay off the loan anytime at zero penalty beyond the outstanding principal and accrued interest. For fixed rate home loans, lenders may charge 2–5% of outstanding. Personal loans may have 2–4% foreclosure charges with a 6–12 month lock-in period. Always confirm with your lender before planning foreclosure.
How do I foreclose my loan?
Step-by-step foreclosure: (1) Request a foreclosure statement from your lender (valid for 7–15 days showing exact payable amount); (2) Pay via RTGS/NEFT before the statement expires; (3) Collect the Loan Closure Certificate / No Dues Certificate within 7 days; (4) For secured loans, collect original property documents (lenders must return within 30 days per RBI); (5) Verify the loan shows as "Closed" on your CIBIL report within 45 days.
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