Home loan is a need for every common man in India when he/she looks to make a big purchase of their life. Home loan cost is misconceived by many. In addition to the rate of interest and principal loan amount, there are much hidden or lesser known charges in the home loan. Planning for the home loan, without considering all these charges may bombard with the surprises when you calculated the overall cost of the home loan. With the historical slash in the home loan interest rate 8.5%, many people are planning to take a house loan. Of course, it is a good time to invest in the property and own one over a period of time with the help of the home finance. The current article aims to enlighten you about lesser known/ hidden charges that are involved in a housing loan.
The fee goes by the name, banks charges this fee for processing your loan application. Processing fee varies from bank to bank and ranges from 0.5% to 2.5%. As you are paying the fee to process the loan application to reach the final point, it is not refundable irrespective your house loan approval or rejection. Most of the big loan takers neglect this fee as it makes a slight difference in the overall cost of the loan amount. However, if your credit hungry behaviour lets you apply for the loan with the multiple banks, this non-refundable fee is going to surge cost of your loan.
Prepayment foreclosure charges
You should keenly look at these charges in the home loan application if you are paying fixed interest on your home loan. Prepayment charges will be levied if you are paying a part of the home loan before agreed tenure. Foreclosure charges will apply if you are closing the debt bay paying off the loan completely. You may have to lose a considerable percentage of the outstanding loan amount in this case.
These charges are levied by the bank for checking the due diligence of the property you intend to purchase. The charges are levied for all the services provided by them like evaluating the property, checking the documents and much more. This can be a percentage of the loan amount or flat fee which is not refundable.
Late payment fee
Every home loan customer should have a strong commitment towards the payment of the loan. Any late payment of the home loan EMI will draw late payment charges which can vary from 2% to 4% on the outstanding amount. In addition, this delayed payment will be reported to credit bureaus which impact your credit score further.