Home Loans are one of the most important loan product that you will ever undertake to fulfill your dream of a permanent home. With the splurge in home loans and collaboration of builders with banks to introduce various schemes to attract buyers, one can often overlook the fine print mentioned in your home loan agreement, which may lead to financial woes later on. Find out the overhead charges that are generally applied on home loan applications to familiarize yourself with the process:

• Processing Fees – Just like any other loan application, home loans too incur processing fees that are charged by banks to process every loan. In general the processing fees is a mix of any admin costs, support staff fees, credit report fees, etc. that a bank will charge you for your individual application. If you have a good credit score, you may find some banks that will offer zero processing fees to make you choose their bank as your home loan provider. Some banks have a standard processing fee of Rs. 10,000 for each home loan application while some financial institutions charge the fee on an interest basis, which is usually 0.5 to 2% of the home loan amount.

• Documentation Charges - All loan applications have a standard documentation fee associated with them. These documentation charges involve the cost of stamp duty, as well as fee for registering your loan application with the credit authorities. Each bank has their own document charge that is determined by them and this information can be requested directly by the borrower at the time of home loan application.

• Missed Payment Penalties – Banks will charge you a hefty fine or penalty at times when you miss any EMI payment. As such banks have an auto debit system, wherein, the EMI is deducted every month at a certain date. If your payment bounces, the bank will make you pay a penalty for default, which not only makes you pay more in interest, fees but also places a dent in your credit score. You can find the late payment or missed payment penalty on the bank website or on your home loan agreement.

• Foreclosure Fees – Foreclosure fees are charges by banks when you pay your home loan in full before the loan closure date. As such the fee is subject to bank policy and some banks do provide zero penalty on foreclosure. Bajaj Finserv, PNB housing, LIC HFL are some banks that offer zero penalty.

• Pre and Part Payment Fees – At times a borrower may prepay a part payment in advance or after some time period to lower the interest burden. Not all banks allow advance part payment and you must check with your bank before you agree on your home loan to ensure there are no unpleasant surprises. Such fees are based on individual application and it is best to check with the bank concerned as their policies change from time to time. Your home loan agreement will also have this information.

• Miscellaneous Charges – At times banks incur hidden fees under the garb of miscellaneous charges. The bank does not provide this information readily and you must prompt your bank to provide you information on any clauses or special terms that incur penalty charges or hidden fees. Some banks also list ‘no hidden fees’ in their loan information page, however it is still recommended to read the fine print of your home loan application to double check that.

You can find some of the best home loan products offered by leading banks and independent financial institutions at Letzbank website. Letzbank is a place for all financial loans and services as well as insurance offerings. You can check your home loan eligibility in a few minutes on the website and also get Instant Quotes from banks that are customized for you. Applying for a home loan directly at Letzbank website also allows you to get the service charge waiver which is exclusive to Letzbank customers.

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