A home loan is a source for many to fulfill their dreams of having their own home and using a home loan eligibility calculator. You can check your eligibility to take a loan.
Receiving 75% to 80% of the fund of the property cost from the lender allows you to go further nearer to your dream. Most people have this misconception that they need to pay only fixed EMI to avail a home loan. But it’s not true; apart from EMI, there are some other hidden charges which you need to pay like document charges, loan processing fees, late payment charges, etc.
Such hidden charges are neither regulated, nor do they comply with any guidelines. A home loan calculator may help you in determining some of these hidden charges.
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Loan Processing Fee
It is also known as loan origination fees, and it is a one-time charge depending on the percentage of your loan amount. This charge is imposed by the bank to process your loan application. Generally, administration fees, application fees, and processing charges are clubbed and charged as processing fees. This fee can be 0.5%-1% of the loan amount, or it can be fixed.
Lender levy these charges for preparing loan agreement, getting ECS mandate activated, and for the collection of some other supporting documents. While processing home loans, essential documents are conserved at a central location. To ensure the document’s safety, banks prefer the most efficient courier services. So, the lending institution will impose your document charge while recovering documents during the closure of the home loan.
To get satisfied with your legal status of the property, the home loan provider hires a legal expert to verify all the documents related to the property. These include land ownership record, previous sale deeds, government records related to the property paper and other documents which you have finalised.
Memorandum of deposit of title deed is implemented for a mortgage by submitting the title documents of the property to the lender willingly. The government imposes a stamp duty for the registration charges. Stamp duty charges may vary from state to state. However, it can be in the range of 0.1% to 0.2% of the loan amount.
Technical or Valuation Charges
To match the amount you have requested with the present value of the property, the lender will appoint an expert who will assess the property you have finalised. The expert will evaluate the land value, determine the structure, and will check upon the quality of utilities and facilities promised to assess the current price of the property.
During the loan tenure, if you want to shift your loan to a different rate of interest, then you need to pay a conversion fee to the lender. Consider that you have taken a loan with a 10 % Interest rate, but during the tenure, your lender may offer an 8 % interest rate to some new customer. To shift to this interest rate, you need to pay a conversion fee of 0.5 -1 % of the loan amount.
Late Payment Charge
As the name signifies, late payment charges are imposed if you are not paying EMI timely, the bank will charge a penalty as a late payment charge. This charge generally includes a certain percentage of monthly interest along with the fixed amount.
Sometimes hidden charges can sum up to a significant amount that can affect your financial flow. So before applying for home loan, it is essential to get some information about hidden charges.