Banks / NBFC collect few service fees and charges from applicant during the loan tenure. Some of this money are earning to lender and others are taxes which is paid to government. The charges are basically be divided in two-parts – Pre-Loan and Post Loan charges.
Pre-Loan charges are applicable and to be paid by applicant for processing of loan. The charges will be processing fees, legal and technical, application fee, administration fee. Agreement and stamp paper fees and others. Not all lenders levy all of these charges. Post loan charges will be during tenure of loan like foreclosure fee, part-payment fees, late-payment and cheque bounce penalty, rate switch charges, physical statement fee and others. Any amount charged by lender attracts 18% GST and which is to be paid by borrower.
The charges associated with home loan varies with Banks and NBFCs as per their credit guidelines. The same type of charge might be named separately by each Bank / NBFC as per their branding preference. Always be aware of the charges applicable under home loan terms and conditions.
Fees & Charges Checklist
- Not all lenders levy this. Few bankers who levy the charge either calculate it as a fix amount payable, or as a percentage of Loan amount
- 18% GST on all fees, penalties, charges or cost collected by lender in exchange of service
Legal and Technical
- Levied if property and/or property documents needs evaluation by team of experts to ascertain eligibility
- State government fee, mostly mandatory to be paid at time of registration
- Levied if a part of Loan is paid in lump-sum in-between the tenure. Majorly charged on fixed rate of interest home loans. On variable rate housing loans, RBI has stopped banks / NBFC from collecting prepay charges
- Levied if loan is repaid in total before the tenure
Late payment or Overdue charges
- Levied if the due-date for EMI is missed by borrower
Cheque Bounce or EMI Bounce penalty
- If the cheque is dishonoured or standing instruction is not processed for insufficient funds or other reasons, the penalty gets appliable
There are other charges which are specific and at discretion of banks like Application Fee, Administration fee, Repayment mode changes charges, Rate conversion or rate switching fees, CERSAI charges and others if any.