Foreclosure Charges
✓ Last verified 14 Sep 2026
The short version
Foreclosure charges are fees for closing a loan entirely before its scheduled tenure ends - banned on floating-rate individual loans by RBI, but potentially applicable on fixed-rate loans if disclosed upfront.
Foreclosure means paying off a loan's entire remaining balance in one go, well before its scheduled end date - distinct from a partial prepayment, though the same RBI rule generally applies to both on floating-rate individual, non-business loans (no charge allowed). See our full prepayment penalty glossary entry and sanction-letter article for the complete current rules, including the January 2026 extension of this protection to certain business loans for individuals and MSEs.
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