If you are planning to take a home loan to buy your own dream home, you better do you homework right, else you would end up paying much more than you had bargained for, apart from the EMI. So, here’s a list of costs, charges and fees that lenders expect you to pay before and after you get your home loan.
1. Processing fee: All lenders charge you processing fee ranging from 0.5% to 1% of the loan amount, so a loan amount of, say, Rs 10 lakh, the processing fee of 0.5% works out to Rs 5,000.
2. Legal fee: Banks and financial institutions may charge a flat amount as legal fee for scrutiny of legal documents such as agreement for sale, etc.
3. Technical valuation charges: The technical valuation charges pertain to the evaluation of the property you intend to buy in terms of legality and fair valuation of the property. Such evaluation is done by an expert who may be an architect, engineer or an accountant.
4. Franking fee: This fee is for certifying the payment of stamp duty by the buyer of the property. This fee can be in the range of 0.1% to 0.2% of the loan amount.
5. Prepayment fee: Prepayment charges are levied by the banks and financial institutions when a borrower pre-pays outstanding loan amount in full or in part. This charge may be levied on fixed rate home loans but not on floating rate home loans.
6. Balance transfer fee: This fee is charged if a borrower decides to transfer the home from on bank or financial institution to another to take advantage of cheaper interest rate,
Apart from the above, banks and financial institutions may levy sundry other charges such as documentation fee, document retrieval charge, cheque return charge, notary fee, additional statement of account fee, etc.
So, you need to check out which of these charges are levied by the bank or financial institution before availing home loan.