25 JUNE, 2021

When availing a home loan, it is important that you know about several charges that are levied by the lender in different scenarios, for various reasons.  Most borrowers are familiar with home loan charges such as processing fees, Goods & Services Tax, stamp duty, etc. Here’s a list of minor and major charges that you need to be aware of:

 

  1. Administration fee for home loans
  2. Many lenders charge you a separate administrative fee, which charged after your loan is sanctioned.

     

  3. Inspection or valuation charges
  4. Before your home loan is approved, the bank will conduct an inspection of the property to estimate its value. As a third party is employed for this process, you will be charged the actual fees.

     

  5. Home loan documentation charges
  6. There are various costs involved when it comes to documentation for your home loan such as the loan agreement. Even if you want the income tax certificate, interest certificate, or the agreement copy, it attracts additional fees.

     

  7. Charges for changing home loan tenure
  8. Numerous lenders charge a fee for increasing or decreasing the original tenure of your home loan. So, you must consider such charges in case you want to change your loan tenure due to personal expenses or increased income.

     

  9. Late EMI payment penalty
  10. As a home loan borrower, you need to pay your monthly EMIs on time. But if you do not, then it shall attract a penalty. Banks charge a late payment fee, which may be a fixed sum or a set percentage of the EMI. 

     

  11. Loan prepayment charges
  12. Making partial or full prepayment of your home loan can lead to additional fees. Some lenders levy a penalty for making excess prepayment than the stipulated amount and some may not charge anything. You should also note that lenders are not allowed to penalise pre-payment of a loan in case of a floating rate loan. However, in case of a fixed interest rate loan, the lender can charge a penalty as per their internal rules.

     

  13. Loan account statement
  14. If at some stage in your loan tenure you need a statement detailing all your EMIs, the total principal and interest paid, etc., you will need to request for a loan account statement from your lender. While leading banks provide this statement free of cost through their online banking channels, some lenders might charge you to issue a physical copy of the statement.

     

  15. Recovery charges
  16. Recovery charges come into the picture in case you do not pay your EMIs, and the lender has to take action to recuperate the expenses incurred.

     

  17. Memorandum of Deposit of Title Deed charges
  18. The Memorandum of Deposit of Title Deed or MODT confirms that you have handed over your property documents willingly to the bank. The government levies stamp duty charges on this, which can vary from one State to another.

     

  19. Home loan conversion charges
  20. Over the years, different types of benchmark rates have become prevalent in home loans, like the Base rate, MCLR and now the Repo Rate Linked rate. In case you want to move your home loan from the one benchmark rate to a different one with the same bank, you might have to pay the conversion fees. The percentage applicable can differ from lender to lender.  

 

Make sure to have clarity on all such hidden charges that can be levied post your home loan sanction. Do not neglect such costs mentioned in the home loan agreement before signing on the dotted line. Ensure you estimate the overall cost of your home loan to avoid any last-minute financial trouble.

 

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.