Home Loan Processing Fees & Hidden Charges

Most banks and finance companies charge processing fees on your home loan application to cover the expenses of taking and considering your application. Processing fees are collected at the time of applying for the loan. Processing fees are normally non-refundable and are charged even if your loan is not approved.This is why it is advisable to find out everything you can before you make a loan application. Choosing the right bank and making a complete application can save you both time and money.

This is something that changes based on the loan provider you have chosen to borrow from. The normal processing fees is usually less than 1% of the loan amount you apply for, but there are also lenders who charge upto 2%. Another common practice among lenders is to maintain minimum and maximum limits on the processing fees they charge to their clients.There is no flat rate for processing fees as each bank is free to charge according to their own policies. Normally however, the cost of processing fees is between Rs. 3,000 to Rs. 10,000. Most banks have a maximum limit on processing fees to ensure that borrowers are not overcharged.There are certain times of the year when certain banks and financial institutions put up offers for home loans with waivers or reduced processing fees.

The reason banks and finance companies charge processing fees is to cover the costs of collecting, maintaining and verifying documents to get the loan approved. This takes time and manpower, for which each bank charges its own fees. The processing fees includes the costs of GST as applicable.

The charge of processing fees is something that is normally in the hands of the bank or the finance company. It is possible to get the charge for processing your loan application waived. There are many seasonal and conditional offers for home loans where there is no processing fees charged to the borrower. Some banks do not charge any processing fees as a part of their policy.It is a good idea to ask for a waiver or discount on the processing fees if you have a good credit score and it is reasonably certain that your home loan will be approved.

Generally, there are three types of fees and charges on home loans- loan-associated fees, documentation fees, government and legal fees.

Loan-Associated Fees

Here are some of the loan-associated fees-

• Login Fee This is a non-refundable fee charged by a few banks.
• Partial Prepayment Charge This fee is levied if you want to prepay a part of the balance loan amount.
• Prepayment Charge A prepayment charge is levied if you want to pay off the entire loan amount before the end of the term. This fee is also called preclosure charge and foreclosure charge.
• Late Payment Fee This fee is levied if you delay paying your EMIs.
• Repayment Mode Swap Charge This charge can be levied in case you need to change the repayment mode or dates.

Home Loan Fees and Charges for Documents

Some of the home loan fees and charges for documents are-

• Stamping Charge Stamping charge is levied on documents between the bank and you that are required to be signed on stamp paper.
• NOC/NDC Charge This charge is levied to get a No Dues Certificate (NDC) or No Objection Certificate (NOC) .
• Agreement Copy Fee In case you want a copy of the loan agreement, you might have to a fee to the bank.

Government Charges for Home Loan

• Legal Fees You need to pay these fees for all the legal expenses that arise during the creation of home loan agreements.
• MOD Charge Memorandum of Deposit of Title Deed (MoD) confirms that you’ve given your property’s ownership papers/title deed to the lender as security for the loan. MoD charges vary from state to state.
• Inspection Fees This fee is levied by the bank for the inspection of the property that you want to buy.
• CERSAI Charge When you keep your property as collateral with a lender, you will have to register it with Central Registry of Securitisation Asset Reconstruction and Security Interest of India. This registration will be charged.