| What are the extra costs on home loans? |
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| Written by Site Administrator |
| Tuesday, 27 October 2009 17:18 |
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Banks levy additional fees at various levels during the process of your home loan. Not all banks have all the charges. Some of the charges are also negotiable. Processing Fees Banks will charge a intial processing fee of Rs. 2500 to Rs. 5000 (varies from bank to bank). This amount allows the bank to meet their expenses for processing your home loan application. Commitment charges Banks may charge a commitment charge which is certain percent of the loan sanctioned if you have not availed the loan for a period of more than six months after it has been sanctioned on your name. Initial interest charges This is the interest amount you pay for the no. of days between the date when the cheque is issued and the date from which the loan account becomes activated (generally the date when you avail the home loan). Prepayment penalty Prepayment is not allowed during the first one year of the home loan. From the second year onwards you are allowed to pay a portion of the remaning principal amount as prepayment. However, such payments may attract a penalty of upto 2% of the total loan sanctioned. Not all banks levy these charges. There are additional rules for deciding these charges. It is better to consult your banker and plan your prepayments accordingly so that you can avoid paying these additional charges. Registration and Stamp Duty These are charges that you pay to the Municipal and registration authorities for registering your house and are not levied by the bank. Some banks offer you this amount as a package along with your home loan. You may have to check with your banker to find out if these charges are included in your home loan amount. Miscellaneous charges Some banks these days are also providing brokerage services to make their service and end-to-end package. Once you decide to buy a house you can directly approach the bank and their agents will pick and review houses suitable for your in your preferred budget. In this event, they may charge miscellaneous fees for this service as well. Brokerage charges If you are buying your property through a broker, the broker you may have to pay the broker his brokerage charges, usually 1 to 2 % of the property value. Comments (0) |