Charges that Every Loan Applicant Should Know About Home Loans
Nov 06, 2017 Home Loan
When a buyer plans to take a home loan to buy the house of their dreams, they go through various websites and compare the interest rates to find the one that suits the best for them. But interest rates aren’t the only thing that you bear while paying off the home loan.
There are certain charges that a buyer will have to incur if the home loan application is rejected. It is better to keep them in mind while comparing the home loan provided by different banks and financial institutes. It helps in giving you a clear picture of the cost that you will be charged.
1.Processing fee:
It is the fee that is charged by the banks and financial institutes for obtaining the documents for the home loan appraisal and underwriting. The processing fees of all the banks are comparable. Make sure you review the processing fee carefully because sometimes it does not include the cost of application processing. The banks later charge extra for the same. Another thing to make a note about is that the processing fee is non- refundable. Sometimes when the loan lender does not want to lose the customer, they might waiver the processing fee. It generally costs from 0.5% to 1.0% of the cost of the property.
2.CERSAI Fee:
CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest) is the central online mortgage registry of India. It was established to check the frauds for the home loan that the buyers take for the same property. It provides the platform to file the registration of transaction and securitization, assets reconstruction and security interest of the banks and financial institutions.
3.Administration charges:
Some banks and financial institutes charge administration fees that are not included in the cost. It is generally for the legal verification of the property. All the banks have outsourced agencies that do the same for them. This report is used to decide whether to approve the loan or not. The agency charges the bank for the report which is in turn levied by the customer.
4.Late payment charges:
If the borrower fails to make the monthly EMI on time, the banks are liable to charge him a penalty for the same. The penalty charges are as high as 2 percent of the total monthly EMI cost.
5.Conversion fee:
When the home loan interests drop, some customers choose to change their interest rate officially. It can be done by paying the conversion fee which is the difference between the old interest rate and new interest rate. Other customers prefer changing the loan lender in some cases which is also chargeable.
6.Pre-payment charges:
If a buyer wants to make an extra EMI in a year, he might have to pay some charges for the same. The banks don’t charge the pre-payment charges if the interest rate is floating rate of interest but they do charges if it is a fixed rate of interest.
There are certain charges that a buyer will have to incur if the home loan application is rejected. It is better to keep them in mind while comparing the home loan provided by different banks and financial institutes. It helps in giving you a clear picture of the cost that you will be charged.
1.Processing fee:
It is the fee that is charged by the banks and financial institutes for obtaining the documents for the home loan appraisal and underwriting. The processing fees of all the banks are comparable. Make sure you review the processing fee carefully because sometimes it does not include the cost of application processing. The banks later charge extra for the same. Another thing to make a note about is that the processing fee is non- refundable. Sometimes when the loan lender does not want to lose the customer, they might waiver the processing fee. It generally costs from 0.5% to 1.0% of the cost of the property.
2.CERSAI Fee:
CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest) is the central online mortgage registry of India. It was established to check the frauds for the home loan that the buyers take for the same property. It provides the platform to file the registration of transaction and securitization, assets reconstruction and security interest of the banks and financial institutions.
3.Administration charges:
Some banks and financial institutes charge administration fees that are not included in the cost. It is generally for the legal verification of the property. All the banks have outsourced agencies that do the same for them. This report is used to decide whether to approve the loan or not. The agency charges the bank for the report which is in turn levied by the customer.
4.Late payment charges:
If the borrower fails to make the monthly EMI on time, the banks are liable to charge him a penalty for the same. The penalty charges are as high as 2 percent of the total monthly EMI cost.
5.Conversion fee:
When the home loan interests drop, some customers choose to change their interest rate officially. It can be done by paying the conversion fee which is the difference between the old interest rate and new interest rate. Other customers prefer changing the loan lender in some cases which is also chargeable.
6.Pre-payment charges:
If a buyer wants to make an extra EMI in a year, he might have to pay some charges for the same. The banks don’t charge the pre-payment charges if the interest rate is floating rate of interest but they do charges if it is a fixed rate of interest.
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