When applying for a home loan, it’s important to consider not only the interest rates but also the additional fees and charges that may be applicable throughout the loan tenure. These charges vary by lender but are fairly standard across banks and housing finance companies.
1. Processing Fees
A one-time, non-refundable fee charged by the lender to cover administrative expenses for processing your loan application. This is usually paid in advance before the loan is sanctioned.
2. Application Fees (Administrative/Login Fee)
Also known as administrative or login fee, this is charged at the initial application stage before the loan is approved. The amount generally ranges from ₹2,500 to ₹6,500.
- If the loan is approved, the processing fee will be calculated after deducting this application fee.
- This charge is non-refundable.
3. Prepayment or Foreclosure Charges
Also referred to as pre-closure fees, these are levied if the borrower repays the entire outstanding loan amount before the end of the tenure.
- Many banks waive this fee for floating interest rate loans.
- For other loan types, charges typically range from 2% to 6% of the outstanding amount.
4. Partial Prepayment Charges
Applicable when the borrower pays only a portion of the outstanding loan before schedule.
- Floating interest rate loans are often exempt from this charge.
- When applicable, the charge ranges from 0.5% to 2% of the prepaid amount.
5. Conversion Charges (Switching Fee)
This fee is charged when you switch between floating and fixed interest rate home loans, or vice versa. The amount varies depending on lender policy.
6. Repayment Mode Swap Charges
If you request to change your EMI repayment method or payment dates, lenders may charge around ₹500 per request.
7. Maximum Loan Tenure
Most lenders offer a maximum repayment period of up to 30 years.
- A longer tenure results in smaller EMIs, but may increase the total interest paid over time.
8. Minimum and Maximum Loan Amount
The amount you can borrow depends on:
- Property value (as per market rates)
- Location
- Credit profile and income
Generally: - Minimum Loan: 75% of property cost
- Maximum Loan: 85% of property cost
Tip: Always compare both interest rates and associated charges across different lenders. Sometimes, a slightly higher interest rate with lower fees can be more cost-effective over the loan tenure.
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