Hi, I took a home loan from SBI for land purchase and build a house. I foreclosed the loan before building the house and within 2 years of taking the loan. Will my loan be charged a home loan interest rate or a land loan interest rate?
You might be charged at the rate applicable for land loans. Most composite loans come with certain conditions. These include a timeline for construction. Usually, banks require that you construct a home within 2-3 years of getting a composite loan. If this is not done, they start charging you an interest rate that is applicable for plot loans. You must understand that plot loan interest rates can be much higher than composite loan rates. Composite loan rates are closer to Home Loan rates. We are guessing this is what happened in your case.
We suggest that you check your Home Loan contract to understand the terms and conditions of the loan. If you have signed such a contract there is nothing much you can do. You can check the terms and conditions to see if they are any pre-closure charges for closing your loan.
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