The processing fee is one of the most common fees levied on a home loan. It is a one-time fee set by banks or lenders when the loan application is processed.
Most banks impose a processing fee on their home loan programs, while some may not charge it or even waive it as a special offer. The processing fee is usually a percentage of the loan amount. Most banks have a minimum and maximum amount to be charged. The current GST on processing fees is 18%.
Types Of Fees And Home Loan Charges
Purchasing a home is a significant undertaking. In addition to choosing the right property, it is also necessary to choose the right lender.
When a consumer applies for a home loan, they must pay more than just the processing cost; other charges or fees may apply throughout the process.
Here are a few of the charges levied by the banks:
- Loan-related fees
- Document-related fees
- Legal and Government fees
A vital thing to remember is that additional GST is applied to these costs almost every time.
Housing Loans And Home Loan Charges
Here are some home loan-related costs that a consumer may have to pay:
- Login Fee – It is also referred to as an “administrative” or “application” fee. Some banks charge this non-refundable amount before the loan is granted. Once the loan is approved, the consumer must pay the processing and login fees.
- Prepayment Charges – It is also known as foreclosure or pre-closure charge. It is imposed if a consumer desires to pay off the entire loan amount before the loan term expires. Many banks do not charge this fee in the case of a fluctuating interest rate or to salaried individuals.
- Partial Prepayment Charges – It is levied if someone desires to pay in installments rather than in full. It is possible that if a consumer intends to make many partial payments, they will wind up paying more to the bank.
- Late Payment Fee – When a consumer skips or delays payment or EMI, this amount is charged monthly until the payment is made.
- Conversion Charge – When applying for a home loan, a client must choose between a fixed and variable interest rate, and if they want to modify it, they must pay an amount to their bank.
- Repayment Mode Swap Charge – This fee is applied if a consumer wants to change their repayment style or amount.
- Recovery Charge – If a customer fails to make payments, the account is placed in recovery, and the bank takes additional steps to recover the amount. In some circumstances, the consumer is charged for the amount spent on total expenses.
- Insurance Premium – Though this is not a compulsory cost, most banks persuade their customers to get home insurance plans to safeguard them from external damage.
Document Related Fees
A consumer must also pay additional expenses for paperwork and documentation:
- Stamping Charge – The bank and customer sign a legal document on stamp paper. The consumer would be required to pay these fees, which are based on the actual cost spent.
- Income Tax Certification Charge – Although most banks do not charge this fee, they give consumers a provisional or final income tax certification for the home loan and principal repayment amount. The customer will have to pay to get the same thing if they don’t.
- Interest Certification Charge – If a customer needs a certificate from the bank detailing the amount of interest paid during loan repayment, they must pay an extra fee.
- NOC/NDC Charge – A consumer must pay these fees to acquire a “no objection” or “no due” certificate.
- Duplicate NOC or NDC Charges – These are used if someone requests a duplicate NOC or NDC on their loan account.
- Fee for Revalidation of NOC – If a customer requests that the bank revalidate their NOC, there will be additional fees.
- Agreement Copy Fee – When a consumer needs the agreement copy for any financial purpose, they must pay a fee to acquire it from the bank.
- Issuance Charge for Photocopy of Title Documents – The title paperwork remains with the bank until the loan is paid off, and if a customer wants a duplicate copy, they must pay a fee.
- Duplicate Statement Issuance Charge – In the event of a duplicate statement copy request, banks charge their customers a fee.
- Amortization Schedule Issuance Fee – If a consumer wants a comprehensive amortisation schedule for their loan term, they must pay a charge to acquire it.
- Document Retrieval Charge – When the loan is closed, the bank charges a nominal fee to consumers who want to retrieve the original documents.
- CIBIL Report Fee – Anyone should be able to obtain a CIBIL report online, but if they want their banks to do it, they must pay a fee each time.
Legal And Government Fees
Here are some legal and government-related fees charged as part of your home loan application:
- Legal Fees – This is the total of all legal documents created between the bank and the customer during the loan application process.
- Validation/Inspection Fee – When a consumer purchases an already-built property, the bank charges the consumer a validation or property inspection fee.
- MOD Charge – MOD stands for “Memorandum of Deposit of Title Deed”, which signifies that the consumer has transferred ownership to the bank until the loan is paid off. This amount varies by state and is determined by the cost of the property.
- CERSAI Charge – CERSAI is an acronym for “Central Registry of Securitization Asset Reconstruction and Security Interest of India.” When a customer purchases a property, it must be registered with CERSAI, for which an additional fee is levied.
The processing fee is a crucial aspect of taking a home loan. Sometimes you might have to pay this on a fixed term, though it may vary depending on different banks.
Read more about housing loans on Piramal Finance today.