Home loans have become a convenience for people in today's time. Lakhs of rupees are needed to buy a house and everyone doesn't need to have this much money in a lump sum. In such a situation, people arrange money with themselves through home loans and keep repaying the loan amount gradually in installments. When you apply for a home loan, the bank gives information to the customers about the home loan interest rate and processing fees, etc., but there are some charges associated with all the services of a home loan, about which neither the customers have prior information nor the banks themselves tell about them. If you are also thinking of buying a house by taking a loan, then you should first know about these charges related to the loan.

Application fee

Many banks charge you an application fee while applying for a loan, it is also called a login charge. This fee ranges between Rs 2,500 and Rs 6,500. After getting the loan approval, it is adjusted in the processing fee of your loan. But if your loan is not approved, the bank does not refund it.

Foreclosure charge

There is no charge on home loan prepayment normally, but if you pay the entire outstanding amount to finish the home loan before the tenure is over, then the bank can charge a foreclosure charge on it. It ranges between 2% to 6% of the outstanding amount. However, banks have some rules regarding this.

Switching charge

If you convert a floating-rate loan into a fixed-rate loan or a fixed-rate loan into a floating-rate loan, then the bank charges you a conversion charge in return. This is also called a switching charge. Usually, it can be from 0.25% to 3% of the remaining loan amount.

Recovery charge

If you do not pay after taking a loan from the bank, the bank declares you a defaulter. In such a case, the bank takes action against the customer for recovery. The money spent in this process is recovered from the customer.

Inspection fee

A team of experts from the bank comes to assess the value of the property for which you are taking a home loan. These experts evaluate the property on many parameters like statutory approval, layout approval, building specification, construction norms, etc. Banks charge you a fee for this inspection work. Many banks include this fee in the processing fee, while some banks charge it separately.

Legal fee

Banks appoint legal experts to get information on whether there is any legal problem in your property. These experts check the title deed, property ownership history, depreciation, no objection certificate (NOC), occupancy certificate, etc. After this, the experts give their final opinion to the bank on whether to grant the loan or not. Experts are paid a fee for these services, which is called a legal fee. Banks also apply this fee to your home loan.