Home Loan Guide in India

Buying a home is always a dream for average Indians for which an individual saves money throughout his life and takes home loan when an individual’s budget goes beyond the expected limit, even a small increase in cost can make a property unaffordable for your pocket.

Hence, it’s important to know the costs associated with owning a property beforehand so that you can include these costs into your budget. Some of the home loan charges are negotiable and you may be able to get a better deal if you negotiate with the home loan officer at the bank before you agree to any deal.

The costs associated with home loans:

Processing Fees: Varies considerably but usually ranges from 0.25% to 1% of the value of the home loan. Some banks may have a flat processing fee.

Before a housing loan is sanctioned, there are certain other fees like:

Advocate's fee for property search and the title investigation report

Property valuation experts fee for valuation report

Fees associated with other technical experts

• After the loan is sanctioned, the fees which have to give are:
• Stamp duty payable for Loan agreement & mortgage
• Insurance premium on property
• Premium on mortgage-linked term assurance policies
• Re-pricing Fee – Is levied if you wish to re-price your loan which is usually a percentage (about 0.5%) on the outstanding loan amount.
• Nominal costs associated with obtaining documents required by the bank or charges levied by the bank on documents they provide you.

Always remember to read the fine-print before signing any document. Here are some of the disclaimers often found in the fine-print that one should always be aware off:

• Most charges are subject to change from time to time at the sole discretion of the bank.
• However, the changes will be made prospectively and the bank will usually provide a month's notice.
• Such a notice may not be applicable to changes in finance charges (interest rates) and to charges levied as a result of regulatory requirements.
• Be aware that late payment charges will be applicable if the Equated Monthly Installment (EMI) due is not paid by the due date.

It is always important to read any correspondence received from the banks carefully and contact the bank immediately in case you need to clarify or spot any discrepancies.

This is not the complete list and you should do your own due-diligence before entering into any contract.

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Jack Joness from his school and college days only had a passion for Mathematics and Statistics. He even used to work as a Data Analysis and Statistics Analysis freelancer during his Post Graduation days. Then after working really hard and gaining lo