If you are planning for a housing loan and are researching on the best deals and offers on home loan at various places then you are advised to consider the various home loan charges. There are several aspects beyond interest rates (which most of people consider as whole and sole aspect, while making a decision on the Home loans and other types of loans). Apart from Home loan interest rates, there are numerous charges; especially the charges which are either hidden or are bonded. The home loan payouts that you must consider before applying for a loan are as follows:
The Processing fee is the fee which is charged by the lenders to cover all expenses done by the lending agencies in an effort to disburse the loan like loan eligibility check and evaluation of the property. The processing fee for various banks varies accordingly and it generally varies from 0.5% to 1% of the loan amount. The processing fee is non refundable fess and whether your loan is approved or not, you are not going to get it back. However, there are options available with you over the negotiation of the processing fees and it depends entirely upon the mutual parties over the amount of processing fees.
The processing fee as in case of HDFC Bank is around 0.5% of the total amount (with the minimum amount being Rs. 2000), while at the same time, the processing fee for the State Bank of India is around 0.35% subject to minimum of Rs. 2000.
The prepayment charges are the charges which plays a pivotal role in the loan and it does not affect in the initial period of loan. The major effect of the prepayment charges gets visible in the longer duration of the loan period, when a person decides to pay off the entire loan amount and is being charged a penalty for this. The prepayment charges are being charged when a person pays the entire remaining loan amount before the closure of the loan period. The pre payment of the loan, in fact results in the loss of the interest rate of the lenders and thus they levy a penalty charge to the borrowers to recover some of the lost interest amount.
However a saving grace is that this fee is only applicable on fixed rate home loans, as the central bank of the Country “The Reserve Bank of India” has barred the lenders from charging prepayment penalty on another type of loans, which is a floating rate home loans.
To account for the prepayment charges, Axis Bank charges 2% of the outstanding loan amount as prepayment penalty, while SBI does not charge any prepayment charges to its customers and charges zero amount as penalty.
Late Payment Charges
The late payment charge is a penalty which is charged to the borrowers in case, they make a delay in payment of their EMIs. Late payment charges can be very high, depending upon the bank rule and policies and thus, one must take extra care, in paying their EMIs and should consider payment of EMIs as a liability and must do it on high priority. Remember, that the late payment charge can be as high as 2% and thus, in you do have a busy schedule, keep a reminder with you over the EMIs payment or make it automatic so that the amount gets deducted on its own on the given date or before it.
Switching Fee (floating or fixed)
Switching of loans allows people to switch their loans from fixed rate interest home loans to the floating ones and vice versa. The switching of loans from fixed rate interest home loans to the floating ones and vice versa calls for a charge, referred to as switching fee. The switching of loans is not available with all the banks and thus one must check the bank of their choice to get the confirmation. At the same time, the borrowers are blessed with an option of reducing their existing loan’s interest rate to present interest rate and are applicable to new borrowers, but all of these is a paid service and switching fees is being charged for this.
The switching fee is different for different banks. For example, the ICICI banks switching fee is around 1.75% of the remaining amount, while the same in case of Axis Banks is around 2% of the remaining loan amount.
CERSAI charge or the Central Registry of Securitisation Asset Reconstruction and Security Interest of India is the charge which is being charged to the borrowers for the maintenance of the central registry of all property being kept as mortgaged. This charge is being taken for the sole purpose of keeping a check on the fraud issues like taking multiple loans on a single property. In case of loan requirement, the lenders can check if the property is already being mortgaged or not and decides if the loan can be sanctioned or not for the same property.
Administrative charges are a one time fee, which at the same time is a non refundable fee and is being charged for the verification and evaluation of the property. The administrative fee also differs accordingly to the banks and when it comes to the charge, it depends on the terms and conditions of the banks on how much to charge as administrative charge to the borrowers.
For example, the administrative charge in case of ICICI Banks is around Rs. 5000, while there are some lenders like GIC Housing Finance who charges the administrative based on the loan amount and it varies to around 1% of the loan amount.
Home loans are a financial help for the people who are in dire need of the money to buy a home of their own. But, there are some of the cases, when the entire home loan process becomes complex with the additional charges as incurred by the lenders to the borrowers and turns into a costly affair for the loan seekers. Thus, make your calculations for home loan requirements with proper analysis.
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