When you compare home loans with distinct lenders, most of you may restrict your comparison criterion to the rate of interest. However, you as a home loan applicant must incur different fees and charges during the home loan application process of SBI home loan, Bandhan bank home loan, Axis bank, HDFC bank, IndusInd Bank, Bank of India or any other lender during the loan repayment tenure. For instance, lender levy processing charges, administrative charges, etc., during the processing stage. You, as a borrower, may incur event-based fees like penal rates, conversion charges, foreclosure, prepayment fees, etc., taking up the specific services or failing to mitigate the loan-linked commitments. Knowledge of such fees can assist you in managing your loan better.
Home loan processing charges offered by the top HFCs and banks in India
|Lenders||Processing charges (percentage of the loan amount)|
|Union Bank of India||0.50 per cent (maximum Rs 15,000)|
|Bank of Baroda||0.50 per cent – 0.25 per cent|
|Tata Capital||Up to 0.5 per cent|
|Godrej Housing Finance||Up to 2 per cent|
|Bajaj Housing Finance||Up to 6 per cent|
|L&T Housing Finance||Minimum 0.25 per cent|
|IDFC FIRST Bank||Up to 3 per cent|
|State Bank of India||0.35 per cent of loan proceeds (Rs 2,000 – Rs 10,000)
50 per cent waiver in the basic processing charges
|LIC Housing Finance||0.35 per cent of the loan proceeds subject to the maximum amount of Rs 50,000|
|Axis Bank||Up to 1 per cent (minimum amount required is Rs 10,000) (Rs 10,000 – upfront)|
|HDFC Bank||For self-employed and salaried professionals – Up to 50 per cent of the loan proceeds or Rs 3,000, whichever is more
For the self-employed nonprofessionals – As high as 1.50 per cent of the loan proceeds or Rs 4,500, whichever is more
|PNB Housing Finance||Up to 0.50 per cent|
|Kotak Mahindra Bank||For salaried – 0.5 per cent
For self-employed – 1 per cent (upfront – Rs 5,000)
|ICICI Bank||0.50 per cent to 2.00 per cent or Rs 1,500 (Rs 2,000 for Bangalore, Mumbai, and Delhi)|
|Punjab National Bank||0.35 per cent (between Rs 2,500 and Rs 15,000)|
|PNB Housing Finance||Up to 0.50 per cent|
Necessary home loan fees and charges
Loan processing charges
Processing charges are 1-time fees levied by the lenders on you for processing your home loan application. Such a charge is usually non-refundable. Based on the lender, this charge may go as high as 3 per cent of the loan proceeds. Few lenders even waive processing charges during the festive season or other occasions.
This fee is charged as a penalty in the case you, as a borrower, repay the full loan proceeds before the end of the term. Few lenders do not permit foreclosure of your loan account till you repay the predefined number of EMIs. But Reserve Bank of India regulations has barred the HFCs and banks from charging a foreclosure fee on the floating rate of interest. Lenders providing home loans at fixed interest rates are completely free to determine whether to levy a foreclosure charge or not.
Partial prepayment fees
This fee is charged as a penalty in the case you, as a borrower, prepay a part of the loan proceeds. However, floating interest rate home loans are exempted from the prepayment charges if availed by an individual. In the case when you, as an individual, opt for the dual rate home loan, lenders may charge a prepayment fee during the fixed rate period. Once the loan begins accruing a floating interest rate, banks and HFCs may not charge the prepayment fee.
Penal fees/default interest/overdue/late payment (per month)
Defaulting on home loan EMIs may result in the levying of penal fees on the unpaid EMI. This fee can either be a pre-determined percentage or a fixed amount of the unpaid home loan EMI.
NBFCs and banks levy conversion charge upon converting your fixed-rate home loan into a floating-rate loan or vice versa or on converting the existing fixed rate to a revised version. For example, in the case of HDFC Ltd., the option for changing a home loan from floating to fixed or vice versa is permitted by paying a fee of 0.50 per cent of the outstanding amount when making the conversion or Rs 50,000, whichever amount is lower.
There are several lenders who levy an administrative charge in addition to your processing charges. This is a non-refundable charge levied to cover your expenditures incurred during the assessment of documents, legal verification, and property valuation. You, as a borrower, must compare this charge while assessing the home loan options. You must prefer those lenders with fixed administrative fees.
Distinct kinds of charges on a home loan –
Besides processing charges, home loans come with various other charges, fees, and penalties. Before you place an application for a home loan, it is necessary for you to know all the charges so that you do not get confused by terminologies and are thoroughly clear regarding what you are paying the bank for.
All banks might not charge all fees as mentioned here, and few banks might employ distinct terminologies while few others might club multiple of them under the same fee type. However, being aware of the expected amount to pay as fees while you are applying for a home loan can be useful.
Roughly, fees can be split into the listed –
- Loan-linked fees
- Document-linked fees
- Government and legal linked fees
Loan-linked fees consist of login fees, also called application fees or administrative fees, prepayment fees – partial prepayment or foreclosure, late payment charge, conversion charge, repayment mode swap charge, recovery charge and insurance premiums. Note that while it is not mandatory to purchase a home or a life insurance policy with a home loan, most banks may insist you insure your property against physical damage. This may assist you in covering your losses.