Home Loan Processing Fees and Charges

While the prospect of being a homeowner can be exciting, it can be overwhelming at the same time, especially when you are taking a home loan to fund the purchase. It is a big financial decision and a long-term commitment. Not to mention, navigating through the world of housing finance can be daunting as you must understand the whole process and the charges involved.

One such critical charge associated with a home loan is the home loan processing fee. Many lenders in India levy this one-time fee to process or facilitate your home loan application. Some of the NBFCs (non-banking financial companies) also term this fee as administrative fees, and they don’t deduct it from the EMIs (equated monthly instalments). This means you must pay the house loan processing fee upfront and from your pocket; this is an integral part of the home loan application process.

What is a home loan processing fee?

When you apply for any kind of loan with any bank or an NBFC, you must pay the processing fee. It is a standard feature, and home loan is no different. You must pay this fee to the lender to process your application. The lenders charge this amount to manage the various administrative expenses to facilitate your loan.

The house loan processing fee may vary from one lender to another. So, as a loan borrower, you must research the processing fees levied by the lender and choose the one with the lowest charge. This is critical because the house loan processing fee directly impacts your overall borrowing cost. Certain lenders offer zero-processing-fee home loans, but be wary of them, as they may have other hidden charges.

Usually, financial institutions may ask you to pay the home loan processing fee upfront when applying for the loan. However, other lenders may deduct this fee from the sanctioned loan amount. Depending on whether you are applying for a home loan with a reputed lender or a private lending organisation, the processing fee can be as high as 4% of the loan amount. However, if you apply for a home loan with reputed NBFCs like Aditya Birla Housing Finance Limited, you may have to pay a minimal fee of 1% of the loan amount.

What does the home loan processing fee include?

As mentioned earlier, financial organisations levy the processing fee to cover the administrative expenses related to processing your loan application. It usually includes fees, like –

• Verification charges

Once you submit your home loan application form to the lender, they will do a comprehensive background check of your financial credentials and cross-verify every detail you may have mentioned in your form, including your age, profession, salary, employer, etc. Also, they will initiate an inquiry with the credit bureaus to know your credit score and repayment history.

For all these tasks, the lenders usually appoint a third-party agency. This is an additional cost that the lenders bear to provide you with the loan. The financial institutions recover the background check cost from you through processing fees.

• Property assessment

If you are applying for a home loan to purchase a new or under-construction flat, the lender will conduct a thorough assessment. They appoint a special team to check whether the building is legal, whether the construction is in compliance with legal laws, whether it is as per the plan approved by the local authorities, etc. They also assess the current and future financial value of the property.

The lenders incur a cost for all the assessments, which they transfer to you through processing fees.

• GST

The Goods and Services Tax or GST is a mandatory expense you must incur when you apply for a loan; it is a statutory cost levied by the government of India. Many lenders collect the GST as part of the processing fee instead of levying it as a separate charge.

Other home loan charges you must know

Apart from paying the home loan processing fee, there are a few other charges that you must be aware of, including –

• Penal charges – 12% p.a. about the current applicable interest rate (not exceeding 24% p.a.) plus GST as appliable
• Non-submission of critical post disbursement documents – Rs. 3000 per month
• Cheque bouncing or cheque return charges – Rs. 750 per instance
• Interest swap charges (from floating rate to fixed rate or vice versa) - 2% of the outstanding principal amount plus the GST as applicable
• Stamp duty, registration fee as other statutory charges – As per actual (this may vary from one state to another)
• NOC (no obligation certificate) issuance charges – Rs. 500

Get the best home loan offer from Aditya Birla Housing Finance Limited

Knowing about the home loan processing fees and other charges involved is paramount to making an informed borrowing decision. It is also important to do your research about different lenders in the market and choose the best one.

Getting a home loan from Aditya Birla Housing Finance Limited is the best way to turn your major life dream into a reality in the most hassle-free way. Whether you want to buy your first home or invest in a second one to generate an alternative income, you can get the loan at the most affordable interest rates, starting from 8% per annum.

Not to mention, you get the loan for a period of up to 30 years, and you can get up to 90% of the property’s cost as a loan, making your purchase more affordable. The simple eligibility and minimal documentation requirements only make the borrowing experience smooth and hassle free!

So, visit the Aditya Birla Housing Finance Limited website, and apply for the home loan now!