When taking out a home loan, the main focus is on interest rates and other charges. But these other charges can have a significant effect on the cost of the loan.
Banks And lenders may charge the borrower a number of fees and charges in addition to the interest amount. Let’s find out what are the home loan fees and charges.
Application Fee: Banks or mortgage lenders charge a fee to cover all the initial costs required to complete the application verification.
Processing Fees: These fees are charged for the cost of credit appraisal and depend on the creditor’s credit profile, income and home loan plan. However, not all banks and financial institutions charge processing fees.
Administrative Fees: Banks which divide the processing fees into two parts. Those banks charge administrative fees. The portion charged after loan approval is known as administrative fee.
Foreclosure Fee: This fee is payable when a person repays a home loan before the due date. In the past, banks or NBFCs used to charge prepayment charges and foreclosure fees on home loans. But on the basis of floating rate based households by the Reserve Bank Charging of pre-payment charges is prohibited. Some banks charge a fee for a fixed rate home loan.
Payment Method Change Fee: This change fee is charged when the borrower requests a change in the existing payment method during the home loan period. The fee is usually up to Rs.500. Of course, there may be differences between banks.
Fees for lowering or changing interest rates: This fee is charged by the bank when the borrower requests his bank to make it available for various reasons. These fees vary from bank to bank. It is usually up to two per cent of the principal amount due.
CERSAI Fee: CERSAI (Central Registry of Securities Asset Reconstruction and Security Interest) is India’s central online security interest registration. Banks and NBFCs visit the CERSAI website to inspect mortgaged assets. Investigates whether the property is claimed by another bank. Banks charge a nominal fee for this process Pays, which is then recovered from the borrower.
Additional charges on EMI: When the borrower is unable to pay the EMI or pays late, the banks charge extra on the exhausted EMI. Therefore, EMI should be paid on time.
EMI Bounce Fee: If the borrower is unable to repay the loan on time due to insufficient funds in the bank account, he is charged EMI Bounce Fee. In case of EMI bounce, the bank usually charges a fee of Rs.500 / -. This fee varies from bank to bank.
Legal Fees: These fees are usually included in the processing fee. But when some banks enlist the help of a law firm to verify the legal documents of the borrower, it is charged separately.
Packing Fee: When a property is purchased or sold, a stamp duty is levied by the state government on the sale price. This fee is also called franking fee. These charges vary from state to state.
Courtesy : maharashtratimes.com