Understanding the various fees associated with a home loan application is crucial for a comprehensive view of the overall cost. Here are the key components:
Processing fees – This is a one-time, non-refundable charge payable at the time of loan application processing typically ranging from 0.5% to 1% of the loan amount.
Legal charges and valuation fees – These cover the cost of legal scrutiny of property documents. It ensures the property is free from legal encumbrances. Legal charges vary and depend on the complexity of the legal verification process. Valuation fees involve the valuation of the property to determine its market worth. It is charged by the lender to ensure that the property’s value aligns with the loan amount sought.
Stamp duty and registration charges – These fees vary across states in India and are associated with legally registering the property in your name. Stamp duty is a state-specific charge, and registration charges are based on the property’s value.
Insurance premiums – Lenders may require you to take insurance, such as home loan insurance or mortgage protection insurance, to safe-guard against unforeseen events. The premium is an additional cost that needs to be considered.
Please note there are no foreclosure/prepayment charges on home loans.
