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.

How much is the average processing fee?

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.

What is the processing fees for?

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.

Can the processing fees be waived?

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.

Learn more about your Home Loan Eligibility here


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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