Availing loans these days is easy, but do you know what are the charges which bank levy on borrower for any other extra services. Here are few things which bank may hide or do not disclose at the time of loan approval. It is better to be well versed with such charges before going for it. Click to know basic terms you should know before availing Home Loan.
Different banks and housing finance companies offer different interest rates on home loan. You should not only decide on the interest rate but should consider various factors which will suit your needs.
Before loan approval, banks crosscheck the amount you applied and the amount of the property so that in case of default they can recover the required amount. For this purpose engineers visit the site and valuate the building or apartment and give the quotes. These charges are borne by the home loan applicant.
There is a lot of paper work involved in home loan process. However, banks do charge for document retrival at the time of pre-closure or in case you need for any other purpose.
So, it is better to make multiple copy of the documents before submitting to the bank.
When other banks reduce the interest rate, one may prefer to close account with the bank with whom they are banking, to avail of the loan from the bank offering reduced rates of interest. One will have to pay pre-payment charges for doing so.
To avoid this, banks allow customers to switch over from a higher interest loan to a lower interest loan by paying a switch over fees which is lesser than the pre-payment charges.
Generally switch over fee is taken as percentage of the outstanding loan amount.
Stamp duty is levied and it varies from state to state. The percentage depends on the assessable value which depends on the sale deed.
The valuation includes components such as salable area value, car park value, floor rate value and amenities.
Other Important charges
A home loan often requires payment of various fees, such as loan origination or processing charges, administrative charges, documentation, late payment, changing the loan tenure, switching to different loan package during the loan tenure, restructuring of loan, changing from fixed to floating interest rate loan and vice versa, legal fee, technical inspection fee, recurring annual service fee.
Every lender should be able to give you an estimate of its fees. Many of these fees are negotiable/can be waived also depending on the bank.
While planning your finances, don't forget to include the costs of stamp duty and registration.