What are pre-payment and foreclosure charges?

One of the important features that you should consider in your home loan product is the availability of pre-payment facility. While some banks may not allow you to prepay your loans, others could be providing you the facility to prepay a certain percentage of your principal amount every year with or without a penalty charge. These charges are typically known as pre-payment or foreclosure charges and vary between 1-2% of the amount being prepaid. It would be worth your while to compare this feature across the product options you are evaluating since this flexibility can help you reduce your interest burden if you can manage to close your loan earlier.

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