I HAVE BEEN TOLD TO SAY…THIS IS A HYPOTHETICAL EXAMPLE –
ANY resemblance of this to the real world should not happen..
Viewer: Sir I have a home loan of Rs. 45 lakhs payable over 20 years at a (floating rate) of 11.75%. A new Aggressive Bank is offering me a New Loan of Rs. 45 lakhs at a rate of 11%. However this will involve paying a 2.1% prepayment charges.
What would you suggest?
Answer given:..You will spend about 90,000 as prepayment, but you will save about 0.75% p.a. for the next 20 years (=22,500 * 20 years) whereas you will pay only Rs. 90k as prepayment charges. So definitely worth it.
Will the readers pick holes in the story please?
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