Building your dream home is much more affordable and easily achievable with financial institutions offering home loans with minimal documentation and lower home loan interest rates. However, the fact that needs your attention is that several hidden charges may be levied along with the EMI that you are paying. This increases the loan amount and the cost of borrowing. Here is a list of 10 such hidden charges:
1. MOTD (Memorandum of Deposit of Title Deed) charges:
It states that you (the borrower) have deposited the property’s title documents to obtain the home loan. It requires a stamp duty that ranges from 0.1% to 0.2% of the final loan amount.
2. Documentation charges:
Some lenders charge a documentation fee to complete the documentation process, which has to be borne by the borrower.
3. Legal fees:
It is charged by the bank when lawyers are appointed to look after the legal aspects of the loan processing.
- Tenure change charges:
If you want to extend or shorten your home loan repayment tenure, the bank charges a fee for the term change.
4. Prepayment charges:
There are provisions for pre-closure of the home loans in most cases. But to do so, you need to pay a charge taken by the lender to make up for its income loss due to the prepayment or foreclosure.
5. Late payment charges:
If the monthly installments are paid late, the lender charges a late payment fee, a percentage of the loan amount added with a fixed penalty rate.
6. Processing fee:
The bank charges this fee before the loan is sanctioned. It is an administrative cost that ensures that the loan process runs smoothly.
7. Administration charges:
This fee is charged after the loan is sanctioned and is a general fee to cover the lender’s operational loan costs.
8. Inspection fee:
Before sanctioning the loan, banks will conduct a detailed inspection by hiring experts, for which the borrower must pay a fee.
9. Credit score report charges:
Approval of your home loan depends upon your credit score. If you need a copy of the same to be issued by the bank, they will charge you a fee.
Conclusion
Not all lenders charge these charges. Even if they do, the amount and rates vary from lender to lender. We all compare the EMI through the home loan EMI calculator and loan interest rates online. But along with these, comparing the ancillary charges associated with a home loan helps us keep our home loan cost of borrowing low.
