Hi Agarwal,
Thanks for the clarification. But... see what Mr. R.V.Verma says, (This is what you have posted):“We are going by the nature of the loan at the time of contract. If it is a loan where the interest rates are fixed at the time of the contract, it will be treated as a fixed rate loan. On the other hand, if the loan is at floating rate in the initial years, the norms of floating rate will apply and the borrower can prepay without any charges even if it turns fixed in subsequent years,” said R V Verma, chairman, National Housing Bank.
This means that the benefit of prepayment of loan dues without any penalty will be available only to those borrowers who at the time availing the housing loan chose floating rate of interest. As such, this benefit is not available to those who chose fixed rate of interest the time of availing loan.But the news says, as per your posting, borrowers are changing to floating rate of interest to take advantage of lower rate of interest. How this is possible? Should not the borrowers be properly educated in this regard? How HDFC and SBI are allowing this?
M.J. SUBRAMANYAM, BANGALORE