Today’s countless loans are being sanctioned every minute of the day all over the world. Loans are actually taken for numerous purposes. If you want to apply for a loan for your new house then you are looking for a house loan. You file your home loan application with that bank which provides the best competitive rate of interest to you. However, you have to consider the other charges as well. Banks might provide a lower interest rate, but in doing so will impose heavier charges and fees on you which may go overlooked. Even if you are not able to avoid them it is always prudent to know about them and select bank afterwards.
In this post about home loans in Delhi I will be listing some charges which your bank may have neglected to tell you.
Processing Fees: As the name suggests this fee is collected towards processing of your home loan application. This fee is not refundable and is collected forthright irrespective of the fact that your loan is approved or not. Take this into consideration before selecting the bank you want to avail the loan from. It may differ for every bank but generally might be 0.5% till 1% of the loan money.
Prepayment Penalty: Although pre-payment charges have been discarded, but just for floating home loans. Certain banks are found to be charging this penalty even now if the customer utilises third party funding instead of his own. Pre-Payment penalty stays applicable for fixed home loans or loans taken under particular schemes.
Mortgage Deed Fee: This is one of the major charges you will have to incur while opting for a home loan. It is generally a percent of the total home loan amount. In general, most institutions charge 0.5 per cent of the loan amount as an MOD charge. So for a loan of 40 lakh, the Mortgage Deed charge will be Rs. 20,000.Some banks relinquish off this extra cost to make the home loan look more attractive. But again, it may be subject to another set of terms and conditions.
Commitment Fee: Some banks impose this fee in the event of the borrower not availing the loan within the stipulated phase of time after the processing and sanction. In this the bank stands to lose interest on the unpaid money. Hence, it recovers a section of the interest from the borrower and this interest is called a commitment fee.
Legal Fee: Before giving a loan, banks have to check the reliability and integrity of the borrower. They employ lawyers to authenticate the legal standing of the borrowers’ property. The lawyers charge fees for their services which are ultimately passed on to the borrower. On the other hand, if the property you are purchasing is approved well in advance by any bank or institution, this fee is not valid.
Please bear in mind that not all banks charge all of the above mentioned fees. Hence, it is always advised to verify with the banks in advance to avoid any revelations.