RBI has alos banned the pre-payment of charges on the floating rate home loans but they have still not clarified the chargeability of the pre-payment of charges on the teaser rate loan even after the consumer has turned into a floating rate loan. But the housing finance companies like LIC Housing Finance has refused to stick to the NHB circular and has come out with a 3 month fixed rate scheme where the rate is fixed at 10.40 percent for the first 3 months and then shifts to a floating rate loan which is at the rate of 11.90 percent.

This rate is far more than the rate which the regular floating rate loan offers and so even if the consumer wants to get rid of the high rate, he will have to pay high pre-payment charges which are at 2.25 percent and is inclusive of the service tax. This was one of the example to showcase how the lenders continue to discriminate againts the existing borrowers. Now most of the major lenders have a dual rate schemes which they force into the consumers and the consumers gets no benefit out of it.

Generally the consumers are unaware of the pre-payment charges that they would have to pay if they shift to the regular floating rate loan. The purpose of these dual rate loans is to trap the customers into a long term contract with unfair terms and high exit penalty. So one thing that one must avoid is “dual rate” loan. Its better to take a regular floating loan to ensure that the lender treats you fairly in the later years.