Home loan just like any other loan type comes with its own set of costs other than the processing and interest rate charges and some of these applicable charges in fact escape the attention of the borrower. But when it comes to longer tenure borrowings such as home loan one ought to factor in these lesser known charges and fees for better deal. So, herein we detail such home loan charges that you might not be aware of:
1. Franking charges or stamp duty fee: Some of the lenders while processing your home loan application charge a franking fee that is commonly known as stamp duty fee. Stamp duty is the tax levied by the state government on any of the monetary transaction that entails transfer of property rights. Notably, the stamp duty charges differ from state to state and depend on nature of the property, its location as well as the applicable state laws.
2. Fees associated with swapping repayment mode: Most of the lenders charge a fee that could go as high as Rs. 500 per swap (at every instance during home loan servicing) for switching home loan repayment mode from post dated cheque option to ECS or electronic clearing settlement. The charges however differ from lender to lender.
3. CERSAI charges: Central Registry of Securitisation Asset Reconstruction and Security Interest have been established primarily to do away with such fraudulent instances wherein against the same property individuals take multiple loans from different lending institutions. The organization maintains a central record of all equitable mortgages against a property together with details of borrower and lender. Lenders that are approached for any such borrowing can use the website of CERSAI to check whether the property against which they are extending loan is not encumbered by a security interest created by some other lending bank.
Within 30 days of security interest creation, lenders are required to register details with the CERSAI. And for the process, CERSAI has prescribed nominal rates to be charged to the home loan borrowers and is fixed at Rs. 50 for loans up to Rs. 5 lakh and Rs. 100 for loans over Rs. 5 lakh.
4. Interest rate switching fee: Borrowers in view of the different market conditions often place request for switching interest rate setting regime from base rate to MCLR regime, from fixed to floating rate or from a higher floating to lower floating rate. This request is generally honoured at a cost that could go as high as 2% of the outstanding principal amount or as may be the limit decided by the bank. Lenders usually prescribe the frequency limit for such switches allowed during the loan tenure.
5. EMI bounce charges: In case you default on your home loan EMI by not maintaining sufficient funds in your account as on the due date, you are liable to pay additional charges as EMI bounce charges of up to Rs 500. This is irrespective of your chosen EMI repayment mode.
6. Delayed payment charges: When your EMI becomes overdue, lenders charge penal interest rate at the rate of 24% per annum or 2% on a month on month basis on the overdue installment or outstanding dues. This is to be noted that such charges are levied over and above the home loan interest rate.