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Different costs involved while taking a home loan

Different costs involved while taking a home loan

posted on 2019-08-23 11:00:03 by Admin

Having an own house is the aspiration and dream of many people, as who wants to continue to pay the rent throughout their lifetime. Everyone wants to get free from paying rent and for that, we have the benefit of home loan which is the most beneficial loan in fulfilling your desire of having a home. But home loan, before getting approved from the lenders requires some amount of charges, which are basic costs and are levied form every bank and lending institutions. Generally, people get so engrossed in the interest rates and the EMI that they forget the hidden additional charges which are levied on them. Before applying you should have the proper knowledge of these costs. Such these costs are

1. Application fees- for processing your application, generally lenders require some amount of charges which may vary up to 1000 to 5000rs. This is taken for the application purpose, to conduct the verification of your application and documents.

2. Processing Fees- Processing fees is the basic charge which gets deducted almost in every category loan, it covers the cost of credit appraisal and it generally ranges between 0.50%- 2.0%, of the loan amount plus the applicable taxes, which are levied.

3. Administration charges- After the loan amount gets sanctioned from a bank, an administrative fee is charged. It varies from lender to lender regarding the charge.

4. Technical Valuation Charges- These are the charges which are issued in the process of the assessment of the property. For home loan at least two valuations are done, these are generally done for the high value property case.

5. Balance transfer charges- Balance transfer charges are levied when the borrower wants to transfer his amount to another lender. And to do that, he/she is supposed to pay the balance transfer charge to the current bank from which he has a running loan to another institution to avail this feature.

6. Legal fee- This charge of fee is involved for the scrutiny of legal documents that include the agreement of sales or purchase of property.

7. Pre-payment charges- This charge is levied when the borrower wants to prepay a specific amount in full or in parts. But if you have floating rates with your loan amount then no need to pay it, but if you have fixed interest rate running then it is applicable.

8. Notary fees- THIs fee is levied for the KYC (Know your customer) or for the POA (Power of attorney) , in which it is required to get notarized by the Indian embassy or from any local notary. This is generally for the NRIs, who want home in loans in India.

9. Documentation Fee-It is a mandate fee which is taken after the loan agreement is signed and ECS( Electronic Clearance Service) is activated, about 500-2000 is taken.