While taking a Home Loan, interest charges are not the only cost that you have to pay. There are many other costs such as processing charges, commitment fee, prepayment penalty and miscellaneous costs. We are usually unaware of such things. You must be aware of any other charges in Home Loan before going for one. You must compare the various charges and interests of a Home Loan before taking one. Different banks have varying policies and hence

Different Hidden Charges in Home Loans :

Processing Charges

These charges are paid along with the application form to avail a Home Loan. This fee is typically 0.-5-2% of the total loan amount. This fee is non-refundable even if the loan application is rejected. This fee is charged for accessing loan eligibility and evaluating the property value. You must opt for the banks which offer lesser processing charges.

Commitment Fee

Commitment fee is often confused with the interest rate. It is the fee charged by the lender on the loan. It’s the fee charged for a line of credit. A line of credit is a credit source extended by the bank in the form of overdraft protection, demand loan, special purpose, term loan, traditional revolving credit card account, commercial bills, etc. these charges are levied as a compensation for keeping the line of credit open or guarantee a loan at a specific date in future. In case of construction loans the charges are linked to the project completion.

Document Retrieval Charges

These charges are levied at the time of the closure of loan. It is the fee of transferring the original documents from central document repository to the borrower. Normally all original documents are received by bank in 2 parts, the most important documents that are kept in safe custody by the bank and general documents which are kept at the loan location. Suppose you have availed a Home Loan in Jammu from some bank and the central repository of the bank is in Delhi. So the bank will ask for the charges of transportation of documents. These other charges are not levied if the bank repository is in the same state.

Inspection Fees

Property inspection is done before sanctioning the Home Loan to fix the property valuation. When the borrower is not able to return the money to the bank, the bank has no option but to auction the property. So, if the property has some issues the bank will obviously take money from the borrower. You must check your property papers beforehand and make sure that there are no issues with it.

Changing Loan Tenure

If you wish to change the amount of EMI, the bank may charge some fee for that. You may want to increase or decrease the EMI, but you must know that it may cost you a large amount of money. This is another hidden charge to take care of.

Late Payment Charges

You have to pay extra money if you do any delay in the EMI. This is similar to all the other bill payments. You must avoid delay in the payment of loans.

Copy of Original Documents

You must keep 2-3 copies of the original documents you are going to submit to the bank. If you ask for a photocopy of your original papers submitted to the bank, they may charge some fee. The charges can be ranging from Rs.2- Rs.1000 for the set of your documents.

Documentation Charges

You have to pay some documentation charges for your Home Loan as there are many documents required.

Legal Fees

Banks usually hire lawyers to check the legal issues if any in your property. Some banks charge the lawyer fee for the same. But if your property is already approved by some financial institutions, these charges are not levied. You must get your property approved beforehand.

MODT Charges

MODT refers to memorandum of deposit of title deed. This fee is charged for an undertaking that you are submitting your documents to the bank with your own will. It might cost 0.1-0.5% of the total Home Loan.

Prepayment Penalty

You have to pay a penalty when you are doing a Home Loan pre-payment because the lender may lose his rate of interest. The penalty is around 2% of the charges paid early. You must decide the EMI and pay it according to the dates.

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