Interest is not the only charges one incurs on the home loan, which is the only charge one look at while taking a home loan from a financial institution. Following are the home loan charges you should know about
- Application fee: This fees is charged by banks to cover their preliminary expenses towards home, office verification etc. This can range between Rs 1000/- to Rs 5,000/- depending upon the lender and type of loan you are applying for. One of the most common home loan charges you should know about, which you can get waived off from the bank.
- Processing fee: Lenders charges a fee ranging from Rs 10,000 to 1% of the loan amount to service the cost of the credit appraisal. It further depends upon profile of the borrower, home loan type, consumer credit profile, profession of the borrower, etc.
- Administrative fee: This fee is not charged by most of the lenders but one should check with his/her lender to be sure. Also, there might be the case lender split the processing fee into two parts. The one taken post sanction of the loan is called admin fee. In addition, this fee can be higher than the processing fee and
- Legal fee: Banks hires external law-firms to check the legal documents of the borrowers. Normally, the legal fee is part of the processing fees except in case of some PSU lenders who take the fee separately from the borrowers
- Technical evaluation fee: For properties which are of high value the valuations are done twice for higher caution. The lower of the two valuations is considered for the lending. Fees if not absorbed by the lender, is collected from the borrower by some PSU lenders. Also, some financial institution conduct valuations at each time of disbursal and they may charge you for it
- Franking fee on the sale agreement: In some states of India, there is a stamp duty payable on the property agreement with the builder or seller. This used to be a flat fee of Rs 200/- earlier but now been revised to 0.1% of the property cost subject to a maximum of Rs 20,000/-. However, those states which follow this, allow adjusting the amounts with the final property registration deed upon submission of the agreement in which the fee was paid to the Sub-registrar’s office
- Franking Fee on the loan agreement: Some states in India do not have it at all, some have 0.1%-0.2% of the loan amount being payable.
- Intimation of registration: Only in Maharashtra, there is a need for intimation to the sub-registrar’s office which cost around Rs 1300 only
- Notary charges: One has to pay notary charges at time of loan approval as all your documents need to be notarised by a local Notary. In case of an NRI, it need to be notarised by Indian Embassy and local notary abroad
- Indemnity: There is stamp fee of a few hundred rupees (depending upon the State) and a notarisation may also be required. The purpose of these documents is to keep the interest of the lender safe i.e. risk is borne by the borrower and not by the lender in case there is any issues arises in the future
- Mandatory insurance: When you are taking loan from PSU banks, they have required you to get home insurance on the property. Its one time expenditure cost around Rs. 10,000 to Rs. 20,000 depending upon the property value.
- Documentation fee: For getting the loan agreement signed, getting the ECS mandate activated or a few other formalities, few lenders still do charge this fee. This is generally nominal, say Rs 500/- to Rs 2000/- approximately.
Above are the home loan charges you should know about so that there are no surprises for you later on. Also, these home loan charges varies from bank to bank and one have to factor in while taking a decision on a home loan.
Hope you find above article on Home loan charges you should know about useful in your decision journey of taking a home loan
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