A home is where the heart is! A person strives all his life and yet is unable to save enough funds to purchase a home of his/her choice. What’s more, the increase in the prices of real estate properties has further dented a common man’s hopes to buy a home.

Nonetheless, the concept of Home Loans has helped people get home finance to buy a home of choice. However, the availability of the Home Loan also comes with its repayment which comprises of Housing Loan principal and interest rate.

Further, there are some charges and fees that you also need to consider while applying for Home Loans.

This post will help you get some details on the fees and charges involved in a Home Loan application.

Yes, every Home Loan scheme has specific charges and fees linked to it and it becomes vital to know about it so that a Housing Loan becomes affordable. Let’s have a look at some of the major charges and fees involved with conventional House Loans.

The Home Loan Interest Rate

This is the first and major expense that you need to bear while availing funds to buy a home. The lenders charge an interest rate for giving you the Home Loan. The Home Loan interest rate varies from lender to lender. Thus, you should compare all housing finance offer online and select only the best deal that matches your needs and budget. Leading online lenders such as non-banking finance companies offer a minimal rate along with prepayment, higher loan amount and a wider tenor.

The Processing Charges

The Home Loans processing charge is 1-2% of the desired loan amount and comprises of the cost of processing the loan. It also includes administrative charges such as application examination, analysing your financial statements, property vetting and documents verification.

Principal Statement and Loan Statement Charges

The cost covers the cost of printing and posting the loan’s interest and principal statements. Consider a lender that charges a nominal amount for it. Many lenders have started providing these statements online so you don’t need to pay these charges.

EMI Bounce Charges

Sometimes, during the Home Loan tenor, your EMI payment may bounce due to unavoidable circumstances. As a result, you need to pay some penalty which may be anywhere to Rs.2,500. So, it is advisable to avoid any delay and pay your Home Loan EMIs on time.

Penal Interest

If you make a delayed payment, you need to pay a late payment charge (2% of the loan/EMI delayed) or default on EMI payment or the loan.

Secure Fee

The secure fee is a charge that is asked by lenders who offer online services. Nowadays, there is something called a digital customer portal from where you can access all Home Loan and other loan details 24/7 and 365 days and track from anywhere.

Foreclosure Charges

For foreclosing the Home Loan account before the scheduled time, the lender charges foreclosure fees. It protects the lender from an abrupt end to their payment in the event of the foreclosure. Some leading online lenders do not charge for letting you foreclose the loan.

Prepayment Charges

When you make a prepayment other than your EMI towards the loan account, you will need to pay some charges to your lender. Thus, if your lender charges it, ensure it’s not higher. Most of the online lenders don’t ask for prepayment charges.

The Bottom Line

You are now aware of the Home Loans’ charges and fees that you need to bear other than the EMI which coughs up a considerable amount out of your monthly income. Happy Home Loan management!

Author's Bio: 

Arwind Sharma is a financial advisor with an experience of more than 7 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India. Currently based in Gurgaon, Arwind Sharma is a name to reckon with when it comes to financial management for big brands. A post-graduate in business economics, he is an alumni of Princeton University, USA. During his free time, Arwind teaches children from marginalised sections of society and also work on his blog.