Every Borrower Should be Aware of These Home Loan Fees and Charges in India

Most homebuyers rely on home loans to purchase houses. A home loan can cover up to 75%-90% of the cost of the property, which proves to be a tremendous financial boost. After buying a house of their choice, the borrower can repay the loan in monthly installments over 20 years. So, borrowers can keep earning an active monthly income and pay off the loan EMIs every month without depleting most of their savings.

Home Loan Fee

While this is a great arrangement, there is a lot that one needs to think about before they apply for a home loan. While calculating the cost of a home loan, some borrowers believe that the only charge that they face is the interest rate of the home loan. However, it is also essential to consider additional charges that financial institutions might impose while offering a home loan. This is so important so that borrowers have a clear understanding of the exact cost of the home loan.

So, before applying, take a look at a list of home loan fees that all borrowers should be aware of:

1. Commitment charges

Many people do not know this, but if borrowers do not avail of the loans that have been processed and sanctioned within a specific period, the lender ends up losing interest on the amount that is undisbursed. To recover a part of this lost interest, the lender might levy commitment charges on loan.

2. Processing fees

Lenders apply this fee for processing an individual’s application. Do note that home loan processing fees are generally taken upfront and are non-refundable, irrespective of whether the loan application gets approved. This is why it is so important to thoroughly go through the lender’s eligibility criteria before applying for a home loan.

3. Prepayment fees

Pre-payment charges are no longer applicable as they have been waived off, except for those who have opted for a floating interest rate on their home loans. Do keep in mind that there are financial institutions that still impose a pre-payment fee on borrowers who are making a pre-payment using funds from a third party instead of their savings. Even though pre-payment charges have been waived off for borrowers who have fixed interest rates on their home loans, these charges would still be applicable on loans that have been taken under special schemes.

4. Legal fees

Any financial institution will first check the credibility of each applicant before approving their loan application. The financial institution’s lawyer can then verify the legal status of the applicant’s property. The lawyer’s fee is what can be passed on to the applicant as legal fees.

Borrowers who are not aware of these charges could face difficulties in managing their budget, which might overshoot with the overall cost of the home loan. Also, it is best to check the documents required for a home loan to make the documentation process hassle-free.


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