own Home is everyone’s dream. Own house has great value in Indian society. In such a situation, every person wants to buy a house in his life. In this era of inflation, property rates have reached the sky. Buying a home is the biggest purchase of any person’s life. In such a situation, it is not easy to arrange this much amount at once. This is why home buyers generally take home loans. At present many banks and NBFCs are offering home loans to their customers. But do you know what are the charges while taking a home loan? Let us know.
application fees
An application fee is charged for the processing of your home loan application. This fee has nothing to do with whether you get the loan or not and is non-refundable. If you submit an application to a bank or NBFC and then change your mind, your application fee will be wasted. Therefore, before applying, make sure from which bank or NBFC you want to take a loan.
commitment fee
Some financial institutions charge a commitment fee if the loan is not taken within a specified time period after the loan has been processed and approved. This is a fee that is charged on undisbursed loans.
legal fees
Financial institutions usually hire external lawyers to ascertain the legal status of the property. The fees that lawyers charge for this are collected by financial institutions from their customers. But, if the property has already been legally approved by the institute then this charge is not levied. You should find out from the institution whether the project in which you are going to invest has already been approved. This way you can save legal fees.
mortgage deed fees
This is a big charge that you have to pay while taking a home loan. This is usually expressed as a percentage of the home loan and is a major part of the total amount paid for the loan. Some institutions even waive this fee to make the home loan product more attractive.
prepayment penalty
Prepayment means that the borrower pays the entire or the remaining amount before the end of the loan tenure. This causes loss in interest rate to the bank, hence to compensate this loss to some extent, banks impose penalty. These charges are different in different banks. It also depends on the type of loan. But, RBI has directed all banks not to charge prepayment penalty on home loans taken at floating interest rates. For fixed rate home loans, a flat rate prepayment penalty is charged which is up to 2% of the amount paid upfront.
