To process the home loan it’s a time taking and it takes a legal verification process to which the banks and NBFCs charge a processing fee as a one-time payment before initiating. Lenders charge a one-time fee for processing your home loan application.
The processing charge is a modest proportion of the loan amount. The proportion may differ from bank to bank. The processing charge in India is typically around 0.5 % of the loan amount. Banks may also define a minimum and/or maximum charged amount. Because it is a service charge, you must also pay GST on it. The current service GST rate is 18%.
The majority of banks charge a processing fee for their home loan programs. On the other hand, some banking institutions either do not charge a processing fee or waive it as a special offer. Some banks may charge different rates to salaried individuals, self-employed professionals (SEP), and self-employed non-professionals (SENP).
What are the Loans with No Processing Fees
A processing fee is typically assessed as a percentage of the loan amount. This number is typically in the 0.5 % to 1 % range. Because the loan amount is usually quite large, the processing charge is also quite large.
However, some lenders will offer to waive your processing charge as a marketing strategy. One has to verify the processing fees before applying for the loan.
Here are several banks that don’t charge a processing fee or waive it for house loans:
SBI Privilege Loan and SBI Shaurya Loan Syndicated Kuteer are two schemes offered by SBI.
Apna Ashiana Nainital Bank
Saraswat Bank Ltd. Vastu Siddhi Home Loan under Rs.28 lakh
Different fees on Home Loans of Various Types
Aside from the Processing Fee, home loans have several other fees/charges/penalties. It’s crucial to understand these terms before you apply for a house loan.
All banks may not levy all of the charges listed below; some may use alternative terminologies, while others may group several under the same fee type. Knowing how much you are required to pay for specific actions while you have a house loan, on the other hand, might be quite valuable.
The fees are normally classified into the following categories:
1. Fees for Loans
2. Fees for Documents
3. Fees for Legal and Government Services
Let’s take a closer look at what each cost in a house loan represents. Please keep in mind that you may be required to pay additional GST on practically all of the charges listed below.
Fees for Loans
Login Fee: Also known as the Administrative Fee or Application Fee, this is a non-refundable fee paid by some banks when you apply for a loan, even if your loan is not granted. It is priced between Rs.2,500 to Rs.6,500. If your application is granted, you must pay the processing fee, which will be deducted from the loan amount. For example, if you paid Rs.2,500 as a login fee and the processing charge is Rs.12,500, you will only have to pay Rs.10,000 following clearance.
Prepayment Charge: Also known as Foreclosure Charge and Preclosure Charge, this fee is levied if you pay off your house loan in full before the end of the term. For floating-rate loans and individual borrowers, most banks do not levy a foreclosure fee (as opposed to companies). When this fee is imposed, it ranges from 2% to 6% of the outstanding sum. So, if you close your loan account by paying the remaining sum of Rs.12 lakh, you may have to pay the bank between Rs.24,000 and Rs.60,000.
Banks levy a partial prepayment charge, also known as a part-payment charge or a part-prepayment fee if you pay off a portion of your balance rather than the entire amount. Again, floating-rate plans are typically free from this, but if charged, the cost varies from 0.5 % to 2 % of the loan total. So, if your bank charges this fee and you make repeated partial payments, keep in mind that you will most likely wind up paying the bank far more than you intended.
Conversion Charge: A conversion charge is also known as a Switching Fee; this fee is levied if you want to switch your floating-rate package to a fixed-rate package or vice versa, or from an existing floating rate to a revised floating rate. As a result, if your lender’s MCLR or Prime Lending Rate falls and the overall interest rate falls, it will not be relevant until you pay this fee and convertor switch. For LIC Housing Finance loans under Rs.75 lakh, the charge may range from 0.25 % to 3 % of the outstanding amount, or the lender may set a particular sum, such as Rs.1,000+GST.
Insurance Premium: While it is not required to get a house or life insurance policy in conjunction with a mortgage, most banks will insist that you cover your property against physical damage and name them as the beneficiary. This is to assist banks in covering their losses. When considering a home loan, don’t forget to consider the premium amount as well.
Late Payment Fee: Also known as Penal Interest Rate, this is paid if you fail to make your EMI payments on time. It is generally between 2% and 3% of the late/defaulted amount per month until the payment is made.
Recovery Charge: This fee, also known as Collection Charge, is assessed if you do not pay your EMIs on time, your account falls into default, and the bank/lender is forced to take action against you. The actual costs of the process primarily determine the fee charged.
Mode of Repayment Swap Price: You must pay this fee if you want to change the repayment method or dates. It is usually Rs.500 per request.
Documentation Fees & Fees for Home Loans
Stamping Fee: This fee is levied on any legal document between you and the bank that requires a signature on stamp paper. The fees will be based on the actual costs incurred.
Income Tax Certificate Fee: Most banks will not charge you a fee to supply you with a provisional or final income tax certificate for your home loan interest and principal repayment. When charged, however, it fluctuates from zero to Rs.500 each time you desire one.
Issuance Fee for Amortisation Schedule: If you want a detailed amortization schedule for your loan period, you may have to pay between zero and Rs.250 for each request.
Document Retrieval Fee: This is charged at the end of the loan when you require all of your property’s original paperwork returned from the bank/finance firm. The fees range between Rs.500 and Rs.5,000.
NOC/NDC Fee: This is the fee you must pay to obtain a No Objection Certificate (NOC) or a No Dues Certificate (NDC). The charge per request ranges from zero to Rs.500.
Interest Certificate Charge: This is when you require a certificate from the bank detailing the amount of interest you paid during your loan repayment. The charge per request ranges from zero to Rs.500.
Fee for Revalidation of NOC: If you need the bank to revalidate your No Objection Certificate, this is the fee. The typical fee ranges from Rs.100 to Rs.500.
Agreement Copy Cost: If you require a copy of the loan agreement, you may be required to pay a fee to the bank. This goes from 0 to 500 rupees. These fees apply to any document requested by you from your lender.
Charge for Duplicate NOC or NDC: If you require a duplicate copy of the loan account’s or property’s NOC or NDC, you may be required to pay the price. Typically, this ranges between Rs.100 and Rs.500 for every incident.
Issuance Fee for Title Document Photocopy: You may be required to pay between zero and Rs.1,000 each time you request a copy of your property’s Title Documents, the originals of which will be kept by the bank until the loan is fully returned.
Duplicate Statement Issuance Fee: You must pay this fee if you require a duplicate statement of your loan account. The fee ranges from zero to Rs.250 per request. It is sometimes referred to as a Statement Charge or a Statement of Account Issuance Fee.
CIBIL Report Price: If you demand a copy of your CIBIL credit report, you will be charged a fee ranging from zero to Rs.1,000 each instance.
Home Loan Legal/Government Fees
MOD Charge: A Memorandum of Deposit of Title Deed (MoD) confirms that you have delivered the bank your property’s title deeds/ownership papers as collateral for the loan. It attests to the specific property’s ownership. It is also known as MODTD, DTD, or MODT and is written on non-judicial stamp paper. If your property is embroiled in a legal dispute, this paper may be useful. The charges levied by the MoD vary per state. In Karnataka, for example, the MOD charge is 0.1 % to 0.2 % of the property’s cost (min. Rs.500 and max. Rs.10 lakh).
Legal Fees: This sum must be paid to cover any legal fees associated with the establishment of home loan agreements. This could entail drafting the tripartite agreement between you, the builder, and the bank/NBFC, as well as verifying any other necessary documents. The amount to be paid will be determined by the actual fee charged by the legal advisor/lawyer.
Value/Inspection Fee: The bank charges this fee for the legal valuation and inspection of the property you are purchasing and pledging for the loan. The amount you must pay is determined by the actual expenditures incurred.
Charge for CERSAI: CERSAI is an acronym that stands for Central Registry of Securitisation Asset Reconstruction and Security Interest of India. When you pledge your property to a financial institution, you must register the promise with CERSAI. This must be done to prevent the same asset from being used as collateral for multiple loans. CERSAI fees range from Rs.50 to Rs.500, depending on the action taken.
Please remember that your bank loan does not cover Stamp Duty or Registration Fees. You must pay it separately, and the amount payable varies by state.
Check for loan cancellation fees (if you decide not to take a loan after it has been sanctioned) – these can be a percentage of the loan amount or a set amount. Other regular fees that apply to other sorts of loans and deposits, such as Document Retrieval Charges and Cheque Bounce Charges, apply to house loans the same way they do to any other banking division. If you fail to submit the relevant paperwork or file your records on time, a penalty may be imposed.