Average middle-class Indian citizens and salaried individuals dream of living in their own homes. Home loans provide the necessary financial assistance to avail such residential properties. You can avail as much as 75%-80% of the cost of your dream house as a home loan provided you fulfill the eligibility criteria and follow up on the required documentation. Home loans look lucrative but home loan charges are inclusive of a lot more.
Here is a list of a few hidden home loan fees and charges that are included in a home loan –
- Loan processing fee: Also called the loan origination fee, a loan processing fee is applied by a lender for the processing of your loan application. It is charged only once and calculated as a percentage of the amount of loan applied for. It can be around 0.2%-0.9% of the borrowed amount. Some financial institutions even levy a processing charge of about Rs.12, 000 plus service tax.
- Administrative fee: Record keeping and administrative costs are covered in the administrative fee. An annual charge for maintaining your home loan records is included in the administrative fee.
- Document charges: This entire procedure of processing of documents of your loan requires a lot of effort. That is why lending institutions generally keep your documents at their headquarters or central office. They trust the most proficient courier services to transfer the documents safely. At any time during the loan term or during closure or fore-closure of the loan, if any document is required, the documentation charges are added as an extra cost for home loan charges.
- Memorandum of Deposit of Title Deed: MODT or Memorandum of Deposit of Title Deed is an undertaking given by all home loan borrowers that you have deposited all necessary title documents regarding the property at your own free will and not under any compulsion, for a loan. The State Government charges a stamp duty for registration purposes. This varies from state to state. It is based on some percentage of your loan amount.
- Late payment charges: The name itself is self-explanatory. When you fail to pay your EMIs on time, the lender levies an interest as a penalty charge for late payment. This is called a late payment charge.
- Legal fees: When the financial institution consults an external lawyer to inspect the legal proceedings of your home loan, legal fees are charged for that.
- Technical Inspection fees: Lending institutions need to inspect the assets that are mortgaged against the loan to ensure that the loan amount is not exceeding the asset value. The technical inspection fee is just a term for it.
In addition to the above, property insurance premiums are also levied as home loan charges.
Some non-banking financial institutions offer home loan benefits like no hidden charges with the lowest housing loan interest rates. If you are buying your first home or building your own house or just renovate your existing home, lending institutions like Bajaj Finserv offers Home Loans at affordable rates and many more. You can also calculate your monthly home loan EMI using the free Loan EMI calculator online and decide the amount of loan to avail according to your pocket.
But before availing any kind of loan, you must have a clear idea of the loan scheme, about the type of plan that you are about to opt for, the necessary documents required to be submitted, and most importantly its eligibility criteria and whether you fit in it or not. So, the next time you are planning to buy your home, beware of the cost hidden along. Refer to leading lenders for the most beneficial loan terms and features.