If you are planning on taking a home loan, you have two options as to where you can borrow from: a bank and a non-banking housing finance company (NBFC) like a housing finance company (HFC). Now, choosing between an HFC and a bank for a home loan depends on crucial factors like loan repayment period, processing fee, interest rate, etc.
A loan for your new house forms an essential component under this umbrella. Let’s say you have selected the bank that offers the best rate of interest. But have you looked at the other charges?
A home loan has many other components that can dent you financially, and the selection of a loan should be made only after a good comparison of all the costs.
Here are a few known home loan charges one should know before taking up a home loan:
Processing Fees: As the name suggests, this fee is collected towards the processing of your home loan application. This fee is non-refundable and is collected upfront regardless of whether your loan is sanctioned or not. Take this into account before choosing the bank you want to take the loan.
Mortgage Deed Fee: This is one of the significant changes you will have to incur while opting for a home loan. It is generally a percentage of the total home loan amount. Some banks waive off this additional cost to make the home loan look more attractive. But again, it may be subject to another set of terms and conditions.
Legal Fee: Before granting a loan, banks need to check the credibility of the borrower. They appoint lawyers to verify the legal status of their property. The fees charged by the lawyers are eventually passed on to the borrower. However, if the property you are buying is approved in advance by any institution, this fee is not applicable.
Prepayment Penalty: Paying off the loan before the end of the loan tenure is considered as pre-payment of the loan. While there are no pre-payment charges applicable on home loans with a floating rate of interest, as per Reserve Bank of India norms, lenders do charge some penalty for home loans with fixed interest rates if the borrower wants to repay the loan.
Loan Conversion Fee/Switching Fee: If you have taken up a home loan with a floating rate of interest but now want to switch to a fixed interest rate or vice versa, the bank will charge a loan-switching fee to facilitate such a request. While charges vary from bank to bank, most banks on average, cost 2 percent of the outstanding loan amount. In recent years, such switching fees are more prevalent for fixed-to-floating than the other way around.
Commitment Fee: Some banks levy a commitment fee in case the borrower does not avail the loan within a stipulated period after it is processed and sanctioned. The bank loses interest in the unpaid amount. Therefore it recovers a part of the interest from the borrower known as a commitment fee.
All banks may not charge all of the fees mentioned above. Besides these, other loan-related charges pertain to loan statements, foreclosure letters, duplicate copies of no objection certificate/no due certificate, etc.
So before you apply for a loan with any lender, make sure you go through the fine print
to catch the hidden monsters.
However, with Shubham Housing Development Finance Company, you can get your financial plan without any worries.
A loan for your new house forms an essential component under this umbrella. Let’s say you have selected the bank that offers the best rate of interest. But have you looked at the other charges?
A home loan has many other components that can dent you financially, and the selection of a loan should be made only after a good comparison of all the costs.
Here are a few known home loan charges one should know before taking up a home loan:
Processing Fees: As the name suggests, this fee is collected towards the processing of your home loan application. This fee is non-refundable and is collected upfront regardless of whether your loan is sanctioned or not. Take this into account before choosing the bank you want to take the loan.
Mortgage Deed Fee: This is one of the significant changes you will have to incur while opting for a home loan. It is generally a percentage of the total home loan amount. Some banks waive off this additional cost to make the home loan look more attractive. But again, it may be subject to another set of terms and conditions.
Legal Fee: Before granting a loan, banks need to check the credibility of the borrower. They appoint lawyers to verify the legal status of their property. The fees charged by the lawyers are eventually passed on to the borrower. However, if the property you are buying is approved in advance by any institution, this fee is not applicable.
Prepayment Penalty: Paying off the loan before the end of the loan tenure is considered as pre-payment of the loan. While there are no pre-payment charges applicable on home loans with a floating rate of interest, as per Reserve Bank of India norms, lenders do charge some penalty for home loans with fixed interest rates if the borrower wants to repay the loan.
Loan Conversion Fee/Switching Fee: If you have taken up a home loan with a floating rate of interest but now want to switch to a fixed interest rate or vice versa, the bank will charge a loan-switching fee to facilitate such a request. While charges vary from bank to bank, most banks on average, cost 2 percent of the outstanding loan amount. In recent years, such switching fees are more prevalent for fixed-to-floating than the other way around.
Commitment Fee: Some banks levy a commitment fee in case the borrower does not avail the loan within a stipulated period after it is processed and sanctioned. The bank loses interest in the unpaid amount. Therefore it recovers a part of the interest from the borrower known as a commitment fee.
All banks may not charge all of the fees mentioned above. Besides these, other loan-related charges pertain to loan statements, foreclosure letters, duplicate copies of no objection certificate/no due certificate, etc.
So before you apply for a loan with any lender, make sure you go through the fine print
to catch the hidden monsters.
However, with Shubham Housing Development Finance Company, you can get your financial plan without any worries.
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