20 Additional Hidden Charges On Your Home Loan That You Must Know
Chapter #3 of Digital Loan Series by WhatsLoan (powered by DigiMusk)
Hello Good People,
By now, you are aware of your personal and financial info that is required for the lenders. But there are few more things that you must be aware of in advance.
As a part of Chapter #3, we are walking you through 20 additional charges that you have to pay in addition to the principal amount and the interest on your home loan.
Keep in mind that, not all these 20 charges will be applicable to you. There are few conditions applied to certain charges. Be careful to calculate your whole sum amount to repay.
By the way, if you have not gone through the earlier chapters, I recommend you giving them a read and then coming back here:
Chapter #1) 10 Personal Things Banks Ask You While Determining Your Home Loan
Chapter #2) 5 Necessary Documents For Your Home Loan Application
You can also subscribe here, to stay informed for the upcoming chapters in this Digital Loan Series.
Here you go!
1. Processing Fee
You need to pay this charge to the lender (bank) once your home loan application is accepted. Generally, it floats around 0.5% to 2% of the home loan value. This is a non-refundable fee.
However, there are few lenders such as Kotak Mahindra, Tata capital, Reliance Home Finance Limited, IDBI Bank, Bank of Maharashtra, DBS, Oriental Bank of Commerce that doesn’t charge any processing fee.
2. Application Fee
This fee is required at the initial stage when you apply for a home loan. You’re asked to pay this amount upfront to process your loan application irrespective of whether your loan is granted or not. This is a non-refundable fee. This is also to ensure that you’re serious about going through the home loan process. It floats around 0.5% to 1% of the home loan value.
However, there are exceptions here as well. Few of the banks don’t ask for the application fee.
3. Legal Fee
At times most lenders engage external firms for the due-diligence of the home property against which you plan to borrow the loan.
Tip: No lender should ask you a legal fee as it has to be included in the processing fee itself. Do consider this in case if you’re asked for a separate legal fee to pay along with the processing fee.
4. Administrative Fee
Sometimes the lenders split the processing fee in two stages:
a) Before your loan application is approved
b) After your loan application is approved
The administrative fee if charged belongs to the second stage of the processing fee.
Tip: Carefully see the % split of processing fee and administrative fee if you’re asked for both.
5. Technical Evaluation Fee
If you purchase a flat, which is pre-approved by the bank, technical valuation is not done. As a matter of fact, the pre-approved projects are the ones that go through the legal and technical evaluation and verified to be authentic.
However, in case, if you resale, or do the top-up, or do the balance transfer of the home loan, two technical valuations of the home property is done to assess the market value.
Tip: The technical evaluation fee is included in the processing fee itself. You need not pay it separately.
6. Notary Fee
Are you an NRI applying for a home loan in India? In such a case, you will have to pay a notary fee so that your KYC and POA (Power of Attorney) can be notarized by the Indian Embassy or a local notary available board.
7. Franking Fee On Sale Agreement
In some of the states, you need to pay stamp duty on the property agreement to the builder. This is known as franking fee on sale agreement. It comes at 0.1% of the cost of the property.
Note: Franking is the process to stamp property documents.
8. Franking Fee On Loan Agreement
In some of the states, you need to pay stamp duty to the lenders (banks). They may charge 0.1% to 0.2% of the loan value.
Note: It is not a must to opt-in for the franking fee, you can go for e-stamping as well.
9. Intimation of Registration Fee
This fee process is only followed in Maharashtra. You need to intimate to the sub-registrar’s office and this intimation comes for a registration fee.
10. Documentation Fee
Few of the lenders charge a nominal fee to for getting the loan agreement signed, getting the ECS mandate activated.
11. Adjudication Fee
This charge is applicable in case of NRI application. If you are the POA holder of an NRI, the notarised POA needs to be adjudicated here in India before submission to the lender.
12. Fire Insurance Fee
The lenders who are on the bank’s insurance insist on fire insurance fee for the property.
13. Prepayment Fee
A prepayment penalty is an agreement between a borrower and a bank or mortgage lender that regulates what the borrower is allowed to pay off and when. People do consider prepaying most of the loan amount in order to free up their interest for a longer time. Doing so can attract a prepayment fee.
14. Balance Transfer Fee
This is also known as refinancing the home loan. In this case, the housing loan is paid off using another loan to avail lower rates of interest. You will have to pay this fee to the present lender while transferring the remaining loan amount to the other lender.
15. Loan Switching Fee
This is the charge you pay in order to reduce your interest rate all throughout loan tenure. During the loan tenure, the interest rate can be switched from floating rate to fixed rates or from fixed rates to floating rates.
16. Late Payment Fee
The additional charges incorporated by the banks when the EMI payment is delayed, is called the Late Payment Fees. The borrower is supposed to pay a Late Payment fee of ₹ 500 or 2% additional interest per month as penalty.
17. Loan Tenure Resetting Fee
If the borrower wants to reduce or increase his monthly EMI, that results in the modification of the loan tenure. This change attracts a loan tenure resetting fee that comes for INR 500.
18. Getting List of Documents (LoD) Fee
You might be asked to pay a nominal fee of INR 570 if you require a photocopy of all the documents while submitting the original documents for applying for a home loan.
19. Statement of Account
One annual account statement is free but in case you misplace or don’t receive & request another statement from the bank then the bank might charge up to Rs 500 per statement.
20. Swap Charges
At the time of finalizing your loan disbursement, you have to submit either post-dated cheques (PDCs) or an ECS mandate for loan repayment. These PDCs or ECS instructions are account specific and in case you decide to change banks or get the specific account for loan repayment closed, you will have to submit new PDCs or ECS instructions. In such cases, the bank levies the swap charges. This is a per-instance flat rate charge i.e. every time you resubmit your PDCs or ECS mandate, these swap charges will be levied.
The mission of this Digital Loan Series is to educate you and make you ready for the loan anytime!
If you happen to read this article, we assume you are somewhere in between of thinking for borrowing/purchasing a house. We recommend you to follow the series, or if you have any immediate query, reach out to us at firstname.lastname@example.org.
We also recommend you to share this with your people, your network, and younger ones so that they can be loan ready for the right time!
Signing off (till we write the next chapter to you on next Wednesday)