All you need to identify about Home Loan charges

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All you need to identify about Home Loan charges

Most of us love to have our own house which is a personal asset. All of us dream of becoming homeowners by taking a home loan. It is one of the ways for people to get money for fulfilling their dream of owning a home sweet home. On taking a home loan you will have to pay some amount per month that would be calculated using home loan EMI calculator. Equal monthly installments of a home loan are calculated using a home loan EMI calculator and people can also get the amount due to pay. 

While you take a home loan, it will be essential for you to pay many different charges and that would add on to your property value. Many borrowers are aware of the charges of processing fees and stamp duty fees but added to this there are many other charges that relate to a home loan. While you take your home loan, you should be knowing about the many home loan charges that are associated with it. Let us discuss on the same.

  1. Loan Processing Fee – This is the most common charge by the lender when you apply for a home loan. The lender would charge a fee to acquire your documents when you apply for a home loan. The loan processing fee is a non-refundable fee that the lender charges to meet all the rules associated with the loan. This is charged no matter whether the loan is sanctioned or not. The loan processing fee would be charged about 0.5 % to 1 % of the entire loan amount.
  2. Conversion Fee – If you prefer to alter the interest rate that you pay when the interest rate falls, you can do this by paying the conversion fee. This is an amount that you should pay to minimize your home loan interest rate. The conversion fee is based on the difference between the old and the new interest rate. If there is a big variation between the two, you would finally pay a higher conversion fee. This can also impact the loan tenure and it may be reduced. Most borrowers would often switch to a new lender when there is a reduction in the interest rate. This is done to avoid this fee. But the new lender would also be taking the loan processing fee.
  3. Administrative Charges – Some lenders charge some extra non-refundable administrative fee. This home loan charge typically includes the charges incurred in legal verification and for technical checks of the property together with the borrower’s information. Each lender has their team or an agency in place to verify the property that you wish to purchase. They also create a report on it and based on this the loan amount would be fixed by the lender. The agency would charge the lender for the report preparation and hence the lender charges the amount to the home loan.
  4. Prepayment Charges – When you take a home loan, you must go through the document cautiously, especially regarding the prepayment charges. The Government of India has eliminated prepayment charges on home loans that are taken with a floating interest rate. But, for fixed interest loans, the lender can still charge a prepayment fee. It might seem practical to close off a debt, you should also calculate the amount you need to pay for the prepayment penalty. It should be calculated against the full amount that you would save when you repay the loan in the loan tenure. 
  5. Late Payment Charges – This is yet another home loan charge that all the lenders should know. As it is evident from its name, this is charged on the borrower by the lender who delay paying the EMI. Borrowers should ensure that they pay the EMIs on time and do not delay it. If you do not pay the EMI on time, you would be charged with a good amount of penalty usually charged as high as 2% of the late EMI amount.

Conclusion

All the borrowers should be aware of these various types of home loan charges. You should get much information about the home loan charges from your lender before you begin to apply for a home loan. So, if you are going for a home loan, all you need is to follow the steps to apply for, be aware of the various fees involved, and understand the home loan EMI calculator.

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