Charges on home loans that you may be unaware of

Buying your first property is perhaps the most important decisions you are called upon to take in life. And if you are opting for a home loan on it, it requires you to conduct a thorough research before you decide which the best home loan is for you. Most people tend to think that merely comparing home loan rates is enough to find out the best home loans in India.

But did you know that knowing all about home loan interest rates is far from adequate while checking out the right home loan for you? For starters as a prospective home loan borrower, you should be aware of the host of other charges that you are expected to pay while taking a home loan. Here are some of the charges you may not be aware of.

Processing and Administration fee

In most cases, it is 1-1.5% of the total amount of loan being sanctioned to you. Other lenders may not take a processing fee upfront, but may charge you an “administrative” fee once the loan has been sanctioned and disbursed. This amount tends to be higher than the processing fee. Not only should you check out the processing/ administrative fee of the lenders you have shortlisted while comparing home loan rates, you can also negotiate with the lender to waive off this fee. This will however depend upon the amount of loan you have applied for, you income bearing and your credit score. If you have made a conscious attempt to improve your CIBIL score and maintain a CIBIL score of 850 or above out of 900, you may even be able to insist upon a complete waiver.

Technical evaluation and legal fee

Some lenders may carry out two evaluations before arriving at the true valuation of the property you have chosen. The fee that is associated with this evaluation is absorbed from you as the borrower. Rarely, the lender may pick up the tab for the technical evaluation of the property. The other part of the evaluation is the scrutiny of your legal documents.

Franking fee on sale agreement and loan agreement

Real estate charges vary from state to state in India. Therefore, in some states you may be expected to pay a stamp duty on the property agreement you enter with the builder that is around 0.1% of the cost capped at ₹ 20,000. Additionally, in some states like Karnataka and Maharashtra you need to pay a franking fee of 0.1-0.2% of the total loan amount sanctioned to you.

Indemnity Cost

By charging you the borrower for indemnity, the developer safeguards his interests. By agreeing to indemnify the lender, you are in effect agreeing to bear the monetary risk of the loss or unavailability of an important document, the non- receipt of any important approval from a concerned authority. This is usually a few hundred rupees varying from state to state.

[Source:https://www.creditsudhaar.com/blog/2016/12/09/charges-on-home-loans-that-you-may-be-unaware-of/]