A list of all home loan hidden charges (Policy Matters S01E89)

Now to Get Best Deals on Home Loans: https://bit.ly/35C7rt9 Other than interest rates, what are the upfront charges, such as processing charges or conversion charges? In addition to these, there are some charges mentioned in the terms and conditions that the customer has to bear at the time of closing the loan. Some hidden charges in the home loans are: Processing charges: It is a one-time fee that is non-refundable. Most banks charge 0.25% to 1.5%+ GST. There are special schemes for salaried customers. Some banks don’t charge the percentage and instead charge a standard amount varying from INR 5,000-10,000. But for the non-salaried class, the percentage varies from 0.25% to 1.5% Conversion fees: It is charged when a loan is converted or when you switch a loan from one bank to another. You can negotiate processing fees at the time of taking a loan. There are two types of loans - one has a fixed rate of interest, and the other has a floating rate of interest. For floating, when the rates are increasing, then banks automatically increase the interest rate of loans, but it is seen that when rates are decreasing, then they don’t decrease the interest rate. Banks charge conversion charges for reducing interest rates when rates go down. It is paid to reduce the rate of interest during a loan tenure. You have an option for changing the floating interest rate. For fixed, the interest rate may not change. Pre-closure or foreclosure charges: No foreclosure charges are applicable where the housing loan is on a floating interest rate. Where the housing loan is of fixed interest rate, charges will be implemented. The difference between prepayment and pre-closure is that when you go for pre-closure, then you pay the full outstanding loan amount. In prepayment, if you have a loan of INR 50 lakh and you got INR 5 lakh as bonus or from any other source, you can pay INR 5 lakh, and the remaining loan amount will be INR 45 lakh. There will be no charges on this if you have a floating rate. There won’t be any charges on pre-closure and prepayment at a floating rate. The charges for a fixed interest rates vary from 0.5% to 1.5%. Memorandum of deposit of title deed charges: It varies from 0.1% to 0.2% of the home loan amount. All title documents of the property are with the bank. When I take a loan from the bank, the bank mortgage my property and give me a loan on that property, and the bank tends to further re-mortgage my asset to some other bank. When I complete my loan and try to get back my documents, the bank takes these charges. The government levies stamp duty on this document to register. Switching loan package: These charges are for shifting from fixed to floating home loans. The home loan package is changed to another, but the loan remains linked to floating ROI. Banks usually charge up to 0.5% of the outstanding loan amount in all such cases. Statement of account: One annual account statement is free, but banks charge up to INR 500 per statement for a second statement. Late payment charges: Delay in EMI payment is a costly affair. Banks charge INR 250+ 2% additional interest as a penalty on the amount due. Home loan insurance charge: Housing loan insurance can be negotiated. Home loan insurance can be equated to EMIs. Copy of original documents: If you request a photocopy of documents from the bank, then charges are applicable. Charges vary from INR 2 per page to INR 1,000 for the entire set. Loan closure charges: These charges are for releasing your documents, courier fees or storage charges, which could be anywhere from INR 1,000 – to 2,000. For more information Fixed or Floating Interest Rate... Which one is suitable for your Home Loan? https://www.magicbricks.com/blog/fixe... Top 10 Home Loan Providers in India https://www.magicbricks.com/blog/top-...