Home Loan Charges you Should Know: Processing Fee, CERSAI Charges, Legal and Valuation Fees, Stamp Duty

Home loans are a good way to buy our dream home, but the hidden charges may make life stressful. Have a look at the home loan charges before you borrow loans from any bank.

Getting A Home Loan Know These Home Loan Charges Before You Apply

Everyone dream to buy a home to relax and live happily with their loved ones. But unfortunately, the rising real estate prices make it hard for people, and that's when home loans come in. Home loans are the simplest ways to make your dream home affordable, but there's a catch, many of them come with hidden fees that make lives stressful.

To have easy repayment and ownership of the home, you should know the complete breakdown of your home loan. Doing so will help you know whether you are paying reasonable sums towards your home loan or is the money flowing into shady hidden charges?

This article will cover some home loan charges that you should know before taking a loan.

Loan Processing Fee

This is the first charge you'll face when applying for a home loan. Based on your loan amount and tenure, the home loan processing fee may vary.

Ideally, all banks charge around 0.5% to 1.0% as a loan processing fee. Though this may not look like an immense amount to you, you should know this before you finalize a loan from the bank. Moreover, whenever you apply for the loan, and it gets passed, you have to pay the loan processing fee regardless of whether you finalize a loan or not.

Also Read: Home Loan Disbursement Process

Insurance Premium

Life is uncertain, and if you are the sole bread winner for your home, you need to take insurance. A home loan insurance protects you from all sorts of natural calamities, and other incidents that provide you damage. Moreover, home loan insurances also protect your family in your absence when you pass away and the loan amount is still incomplete. Home loan insurance comes in two premium payment options. The first is one-time premium, and the other is recurring premium. Recurring premiums are better as they have no maximum sum insured amounts. So if you take this insurance, you can keep on increasing sum insured at every milestone of your life.

Primarily, home loan insurance premiums stay around 1 or 1.5% of total loan amount. So, the exact insurance premium expense you will face is based on your loan amount. While its not mandatory to buy a life insurance policy or home loan insurance to cover the housing loan, most banks may insist on having an insurance cover. 

CERSAI Charges

Central Registry of Securitisation Asset Reconstruction and Security Interest of India is a centralized authority which ensures that no property is given as a guarantee for more than one loan. This is done to ensure that banks are not fooled by people, and it also restricts a loan taker’s ability to cheat banks. CERSAI charges stay under Rs 500 on all types of properties. Though it is a small charge, you should be knowing it.

Legal Fees

Legal fees are an important consideration while taking a home loan. Legal fees are paid to the lawyer who builds all the documents for your home loan, and they also help you create your title deeds.

Legal fees are variable and they are based on your location, property’s valuation and other things. So there’s no clear distinction on legal fees, but make sure you do on-ground research before agreeing any payment to legal advisors.

Valuation/ Inspection fees

These are charges towards legal valuation and inspection of the property you plan to buy. The bank may appoint an external Registered Valuer to inspect the property.

Stamp Duty

Whenever you buy a property or mortgage it, you need to redo the sales deed. While you procure a home loan, you need to enter the name of lender/bank into your original sales deed and get it registered at the city sub registrar office. To do this change, the government charges certain amounts, and these vary based on the place you live in.

In case of home loan sales deed redo, the loan procuring party pays about 0.10 to 0.20 % of the loan amount as stamp duty.

All these charges are important to go through, hence before you finalize the loan with your bank, have a look at these and add it to get an idea of the expenses you may incur while procuring a home loan.

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