Taking a home loan is one of the most important decisions in one’s life. Most people, while taking a home loan, are not aware of the additional charges beyond interest payments or tend to overlook them. Since the association between you and your lender is a long-term one, you must be aware of what you’re getting into.
Given below are some of the most important charges that are applicable to a home loan.
1. Application Fee
An application fee is a non-refundable fee that is charged for processing your loan application.
2. Processing Fee
This charge covers the cost of the credit appraisal. It depends on your profile, your income, and your loan type.
3. Administrative Fee
The fee that you pay after the sanction of your loan is known as the administrative fee.
4. Technical Evaluation Fee
This fee is levied by the bank for undertaking a technical evaluation of your property. Most banks already have a list of approved projects and if your property falls in this category, the lender will not perform a technical evaluation. But if that’s not the case, a legal and technical evaluation of your property will be done to estimate its market value before sanctioning the loan.
5. Legal Fee
Lenders often engage legal firms to thoroughly scrutinise your documents that include agreements of sale or purchase. Banks often include this in the processing fee, but some lenders charge it separately.
6. Notary Fee
If you are an NRI, you need to have your KYC (Know Your Customer) and POA (Power of Attorney) notarised by the Indian embassy or a local notary available abroad.
7. Indemnity Cost
As part of your home loan application, you need to indemnify the lender of certain risks. For example, if the builder faces a delay in getting approval or the property tax is yet to be paid, then it is the sole responsibility of the borrower to bear the costs and not the lender. Thus, the lender charges a stamp fee from you and sometimes a notarization is also required.
8. Documentation Fee
A nominal fee is charged for getting the home loan agreement signed and for getting the ECS (Electronic Clearance Service) mandate activated along with a few other formalities.
9. Franking Fee
A nominal percentage of the loan amount is charged in the form of stamp duty on the property agreement with the seller or the builder. This stamp duty charge is only applicable in a few states in India.
10. Adjunction Fee
If you are the POA-holder of an NRI, then it’s important for the notarised POA to be adjudicated before the submission to the lender.
Taking a home loan is a huge commitment. Before going ahead with this commitment, you should be aware of all the conditions and additional charges that are associated with your home loan.
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