When it comes to financing your home, finding ways to save on interest and reduce overall loan commitments is key. With the Canara Bank home loan pre payment calculator, you can instantly calculate how partial or full prepayments can significantly lower your debt burden.
Canara Bank Home Loan Prepayment Charges
Understanding Canara Bank home loan prepayment charges is key to managing costs and planning your repayments effectively.
| Loan Type | Prepayment Charges |
|---|---|
| Floating Rate (Non-Business Purpose) | No charges |
| Floating Rate (Business Purpose) | 2% of the outstanding amount if transferred to another bank/financial institution |
| Fixed Rate Home Loans | 2% of the outstanding amount if transferred to another bank/financial institution |
| Prepayment Without Transfer (All Loan Types) | No charges |
| Micro and Small Enterprises (MSEs) | No charges, even for fixed or floating rate loans, as per MSE Code 2015 |
Note: Prepayment penalties are applicable only when the loan is transferred to another bank or financial institution -For loans closed without such transfers, no prepayment charges are levied.
Also Read: Canara Bank Home Loan Interest Rates
Canara Bank Home Loan Foreclosure Charges
Canara Bank offers flexible terms when it comes to foreclosure of your home loan, helping you clear your dues without added financial burden.
| Loan Type | Foreclosure Charges |
|---|---|
| Floating Rate (Non-Business Purpose) | No Charges |
| Floating Rate (Business Purpose) | 2% of Outstanding Loan Amount |
| Fixed Rate Home Loan | 2% of Outstanding Loan Amount |
| Loans to MSE (Micro & Small Enterprises) | No Charges |
Also Read: Home Loan Foreclosure: Charges, Process, Tips
Canara Bank Home Loan Prepayment Rules and Conditions
Before making a prepayment on your Canara Bank home loan, it’s important to understand the rules and conditions that apply. Being informed can help you manage your finances effectively and avoid unnecessary costs.
- Assess your financial goals, emergency needs, and available cash before prepaying.
- Compare the return on your investments against the cost of your home loan.
- Prioritize paying off higher-interest loans first.
- Consider the stage of your loan tenure before making a prepayment.
- Be aware of any applicable prepayment charges, if applicable.
Also Read: How to Calculate the Right Prepayment Amount for Home Loans?
Canara Bank Home Loan Prepayment Eligibility Criteria
To ensure a smooth prepayment process, Canara Bank has set specific eligibility criteria for home loan borrowers. Here’s what you need to know before proceeding with the prepayment.
| Criteria | Details |
|---|---|
| Individuals | Eligible for prepayment |
| Employment Status | Salaried, Self-employed, and NRIs allowed |
| Non-individuals | Eligible, subject to bank’s discretion |
| Trust | Not eligible for prepayment |
| Age | 18 to 70 years (at loan maturity) |
Check Out: Canara Bank Home Loan Eligibility Calculator
How Does Canara Bank Home Loan Prepayment Calculator Work?
Here is a clear step-by-step explanation of how the Canara Bank Home Loan Prepayment Calculator works — with a sample amount to make it easier to understand:
- Visit the Calculator
Go to the Credit Dharma Home Loan Prepayment Calculator. - Enter Your Loan Details
Suppose you have a home loan of ₹30,00,000, with an interest rate of 8% per annum, and 15 years (180 months) remaining as tenure.
Fill in these loan details in the calculator. - Input Prepayment Amount
Now, let’s say you plan to make a prepayment of ₹3,00,000. Enter this amount in the “Prepayment” field. - Select Prepayment Impact Option
Choose one of the two preferences based on your financial goal:- Reduce Tenure – You want to finish the loan sooner with the same EMI.
- Reduce EMI – You want to lower your monthly EMI but keep the tenure the same.
- Click on ‘Calculate’
After entering all details, click the “Calculate” button to get results. - Review the Results
The calculator will now show:- Your new EMI (if you chose to reduce EMI), orYour new loan tenure (if you chose to reduce tenure)Your total interest savings over the loan period
For example:- If you choose to reduce tenure, your loan could close in approx. 12.5 years instead of 15, saving you around ₹2.8 lakhs in interest.
- If you choose to reduce EMI, your monthly EMI could drop from ₹28,668 to ₹25,718, and you’d still save about ₹1.5 lakhs in interest over time.
- Plan Your Decision
Based on your financial goals, the calculator helps you decide whether to make a prepayment, and whether it’s better to reduce EMI or close your loan faster.
Check Out: Online Home Loan Prepayment Calculator
Documents Required for Canara Bank Home Loan Prepayment
To complete your home loan prepayment, specific documents must be provided to ensure a smooth process. Below is the list of documents you need to submit.
| Category | Required Documents |
|---|---|
| Individuals | – Proof of Identity (PAN/Passport/Driver License/Voter ID) – Proof of Address (Passport/Driver License/Aadhar Card/Latest Utility Bill) – Proof of Income (Latest 6-Month Salary Slip, ITR, or Form 16 for salaried; Last 3 years ITR for self-employed) |
| Non-Individuals (Companies/Firms) | – KYC of Partners/Directors – PAN Card Copy of Company/Firm- Registered Partnership Deed/MOA/AOA – Certificate of Incorporation – Account Statement for Last 12 Months – Firm’s Audited Financials for Last 3 Years |
Read More: What Are the Essential Documents for Securing A Home Loan
How to Make Canara Bank Home Loan Prepayment?
To make a Canara Bank Home Loan Prepayment, you can choose between online and offline methods:
Online
Time needed: 3 minutes
- Log in to Net Banking:
Access your Canara Bank net banking account.
- Navigate to Loan Accounts:
Go to the ‘Loans’ section and select your home loan account.
- Initiate Prepayment:
Choose the option to make a prepayment.
- Enter Payment Details:
Specify the amount you wish to prepay and confirm the transaction.
- Confirmation
After successful payment, save or print the confirmation receipt for your records.
Offline
- Visit Branch: Go to the nearest Canara Bank branch where your loan is serviced.
- Fill Prepayment Form: Request and complete the home loan prepayment form.
- Submit Documents: Provide necessary documents, such as identity proof and loan account details.
- Make Payment: Pay the prepayment amount via cheque or demand draft.
- Obtain Acknowledgment: Collect the receipt or acknowledgment slip for the prepayment made.
Note: It’s advisable to check with the bank regarding any applicable charges or conditions before making a prepayment.
For more details, you can visit the official Canara Bank website: Canara Bank Home Loan
Also Read: How to Download Canara Bank Home Loan Statement?
Why Does Canara Bank Charge You on Making Home Loan Prepayment?
Canara Bank generally does not charge prepayment fees on floating-rate home loans, offering greater flexibility to borrowers. However, for fixed-rate loans, the bank imposes prepayment charges to manage the cost of lending. These charges help the bank cover the potential loss of interest income when a borrower repays the loan early. By imposing charges on fixed-rate loans, the bank ensures it can maintain stable lending operations while offering competitive loan rates.
When are Banks Not Allowed to Charge Prepayment Fees?
Banks are not allowed to charge prepayment fees under specific conditions set by regulatory guidelines by RBI recently. Here are the key situations when prepayment fees cannot be charged:
- Floating rate loans: No charges are applicable for prepayment of floating rate home loans.
- Loan taken over by another bank: When a borrower transfers the loan to another bank or financial institution.
- Repayment from own sources: If the prepayment is made using the borrower’s own funds and not from a loan or external source.
Also Read: Canara Bank Customer Care Number
Things to Consider While Making Canara Bank Home Loan Prepayment
| Factor | Description |
|---|---|
| Age Factor | If nearing retirement, prepaying is advisable to avoid post-retirement financial stress. |
| Future Cash Needs | Assess your upcoming financial requirements to ensure prepayment doesn’t deplete your savings. |
| Tax Benefits | Prepayment might affect your eligibility for tax deductions on home loans. |
| Interest Savings | Calculate the total interest savings to determine if prepayment is financially beneficial. |
| Investment Opportunities | Compare potential investment returns with savings from prepayment. |
What is the Minimum Canara Bank Home Loan Prepayment Amount?
Canara Bank does not explicitly state a fixed minimum prepayment amount for home loans in its publicly available documents. However, it’s generally advisable to prepay at least the equivalent of one EMI to ensure the payment is effectively applied toward reducing the principal balance.
For precise details regarding the minimum prepayment amount applicable to your specific loan, it’s recommended to consult directly with your loan officer or visit your nearest Canara Bank branch.
When is it the Right Time to Make Home Loan Prepayment?
The right time to make a home loan prepayment is typically when you have extra funds and are early in your loan tenure, as it helps reduce your principal faster and minimizes interest payments.
Home Loan Part Prepayment vs. Home Loan Full Prepayment
Understanding the difference between part and full prepayment of your home loan can help you make the right choice based on your financial situation.
| Aspect | Part Prepayment | Full Prepayment |
|---|---|---|
| Definition | Paying a partial amount towards the loan balance | Paying off the entire loan amount in one go |
| Impact on Loan Tenure | Reduces loan tenure or EMIs depending on the terms | Completely clears the loan balance |
| Prepayment Charges | May apply (depending on loan type) | May apply (depending on loan type) |
| Flexibility | Offers more flexibility as only a part is prepaid | No further payments after full prepayment |
| Interest Savings | Reduces interest paid over time | Maximizes interest savings immediately |
Check Out: Home Loan Prepayment vs Investment Calculator
Advantages and Disadvantages of Home Loan Prepayment
Home loan prepayment can be a great way to save on interest and reduce your debt, but it also has its own set of pros and cons.
| Advantages | Disadvantages |
|---|---|
| Interest Savings | Reduces the total interest paid over the loan tenure |
| Reduced Loan Tenure | Helps you become debt-free faster |
| Peace of Mind | Provides emotional relief from reducing debt |
Also Read: Should You Consider Home Loan Prepayment?
Canara Bank Home Loan Prepayment: Case Study
Example Scenario:
- Mr. Sharma took a ₹40 lakh home loan from Canara bank at 8% interest for 20 years.
- After 5 years, he decides to make a prepayment of ₹5 lakhs.
- He compares reducing the EMI vs reducing the loan tenure.
| Parameter | Without Prepayment | With Prepayment (Reduce Tenure) | With Prepayment (Reduce EMI) |
|---|---|---|---|
| EMI | ₹33,458 | ₹33,458 | ₹29,059 |
| Tenure | 240 months (20 years) | 204 months (17 years) | 240 months |
| Total Interest Payable | ₹40,29,920 | ₹31,18,176 | ₹33,79,920 |
| Interest Saved | – | ₹8,11,744 approx | ₹6,50,000 approx |
Key Points
- Prepaying early in the loan term offers maximum interest savings.
- Reducing the tenure gives more savings than reducing EMI.
- Ideal if you receive a bonus, sale proceeds, or inheritance.
- Minimum prepayment must be at least 5x your EMI as per Canara Bank rules.
Also Read: Navigating Home Loan Prepayment: A Simple Guide
Home Loan Prepayment vs. Mutual Fund Investment
When deciding between making a home loan prepayment or investing in mutual funds, it’s important to weigh the benefits and potential returns of each option based on your financial goals.
| Aspect | Home Loan Prepayment | Mutual Fund Investment |
|---|---|---|
| Objective | Reduce loan principal and interest burden | Generate higher returns through market growth |
| Risk Factor | Low risk, as it guarantees interest savings | Moderate to high risk, depending on market conditions |
| Liquidity | Reduces liquidity by tying up funds in the loan | Provides higher liquidity as you can withdraw funds anytime |
| Long-Term Benefit | Reduces loan tenure and interest payments | Potential for higher long-term returns, but not guaranteed |
| Tax Benefits | Can reduce tax deductions on interest paid | Possible tax benefits on long-term capital gains (under specific conditions) |
Read More: Home Loan Prepayment vs Investment
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Conclusion
Becoming a homeowner is a dream—but paying for that home shouldn’t feel like a financial marathon. With the Canara Bank Home Loan Prepayment Calculator at your disposal, you can make well-informed payment decisions that keep your finances healthy and your dreams well within reach.
Frequently Asked Questions
It’s an online tool that helps you estimate the impact of making a prepayment on your home loan, showing potential interest savings and changes in loan tenure.
Input your loan amount, interest rate, tenure, and the prepayment amount into the calculator to see how your EMI and loan duration could change.
Yes, it displays the total interest you can save by making a prepayment, helping you make informed financial decisions.
Yes, the calculator allows you to choose between reducing your EMI or shortening your loan tenure after making a prepayment.
Yes, it can be used for both types but remember that prepayment charges may vary depending on your loan’s interest rate type.
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