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DIFFERENT TYPES OF COSTS INVOLVED IN SECURING HOME LOAN

Posted on Monday January 27th, 2020

Having own house for an individual is the aspiration and dream of many life, as nobody wants to continue to pay the rent throughout their lifetime. Every person wants to get free from paying rent and for that, we have the benefit of home loan at ShubhBank which is the most beneficial loan in fulfilling your desire of having your own home. But before getting approved for home loan from the lenders may requires some amount of charges, which are basic costs and are levied form every financial and lending institutions. Generally, masses get so engrossed in the rates of interest and the EMI that they forget the hidden additional charges which are levied on them being borrower. Before applying you should have the proper knowledge of these different types of costs involved in securing home loan. Such of these costs are:

1. Loan Application fees- First of all, for processing your application, usually lenders require some amount of charges which may vary up to Rs.1000 to 5000. They are charged for the application purpose, to conduct the verification of your application and provided documents.

2. Processing Fees- Processing fees is the basic charge which gets deducted almost in every loan options, as it covers the cost of credit appraisal and it generally ranges between 0.50%- 2.0%, of the loan amount including the applicable taxes, which are levied.

3. Administration charges- When the loan quantum gets sanctioned from a lending institution, an administrative fee is charged. It varies from lender to lender regarding the charge.

4. Technical Valuation Charges- These are the charges which are regulated in the process of the assessment of the property. While you Apply For a Home Loan at least two valuations are done; these are generally done in the case of high value property.

5. Balance transfer charges- These charges are levied when the borrower wants to transfer his amount to another lender. And to do so, he/she is supposed to pay the balance transfer charges to the current lender from which he has a running loan to another lending institution to avail this feature.

6. Legal fee- The fee is charged for the scrutiny of provided legal documents that include the agreement of sales or purchase of property.

7. Pre-payment charges- These charges are levied when the borrower wants to prepay a specific amount of loan in full or in parts. But if you have floating rates with your loan quantum then there is no need to pay it, but if you have fixed interest rates running then it is applicable.

8. Notary fees- This fee is levied for the KYC (Know your customer) documents or for the POA (Power of attorney) , in which it is required to get notarized from any local notary. This is basically for the NRIs, who want Home Loans In India.

9. Documentation Fee- It is a mandatory fee which is charged after the loan agreement is signed and ECS (Electronic Clearance Service) is activated.