Upfront processing FEE -Many banks charge an upfront processing fee for your application. This is in the range of 3000 to 5000. This is a non-refundable fee, even in if the bank rejects your loan application. If they sanction your loan, they adjust this fee in their regular processing fees.
Valuation charges -Many banks charge for the valuation of the property. They have independent advisors on their panel. These banks have a fixed structure of Valuation charges. Some banks asks to customer pays to the bank whereas some of them include this amount in their processing fee structure.
Processing fee -Processing fee amount ranges from 0.25% to a maximum of 2% depending on your loan amount. Salaried employees have to pay a smaller fee whereas self-employed professionals and business persons have to pay extra. Some banks do have a uniform rate. Note that you have to pay GST @ 18% on this processing fee.
Mortgage registration charges – The main security for the home loan is an equitable Most of the states in India require you to register the equitable mortgage in the bank’s name. Under such circumstances, you need to pay stamp duty and registration charges. The equitable mortgage does not have to pay stamp duty in some states like Rajasthan. However, in states like Tamil Nadu, there is a low stamp duty of 1% of the loan amount subject to a maximum of 25,000. In addition to that, you also have to pay 5,100 as registration charges. Be aware of these additional expenses when you avail Home Loan.
Legal scrutiny charges -Legal scrutiny of the property and property papers is mandatory. Every financing bank has to ensure that you get a clear title to the property so that the mortgage and property holds well in law. Therefore, they have a team of legal experts who carry out the search for last 30 years. You need to provide the property documents to these advocates to allow them to do the needful. Some banks ask the customer to pay the legal charges separately whereas some banks include these charges in their processing fees.
Insurance -Taking the insurance of the property is mandatory. Many banks and financing companies has bunch of their products like loan insurance, accident insurance, and critical illness cover, etc along with the loan. Mediclaim family floater policies, They provide the loan for the insurance premium as well. Of course, you have to repay the same amount in your EMI. In a way, it is very good to have these insurance policies because life is uncertain. In case something happens to the borrower and the co borrower, the insurance can take care of the home loan. However, other than the property insurance, all the other policies are optional. You can refuse to take them. One of the biggest confusion faced by the customers taking home loans is whether to go for a fixed rate of interest or a floating rate. In case you feel like the interest rates can rise in few months or year, it is better to go for a fixed rate. However, if you expect the rates to remain stable or go down, it is better to stick to a floating rate of interest.
Pre-EMI charges -Some banks charge pre-EMI. They take Emi’s before actual Emi starts.
Note, fixed rates of interest are usually more than floating rates. Therefore, if you expect the rates to increase more than 1.50%, then it will make sense to opt for a fixed rate. The chances of a steep increase are remote.
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