Miscellaneous Charges of Home Loans

It is a well-known fact, that one takes a Home Loan only once or twice in his/her whole life cycle. Hence, however, well read one may be, it is well near impossible to understand the detailed implications of Charges involved in taking a Home Loan.  There are various charges one has to pay at each stage of a Loan from Application to Loan Disbursement. And well, the charges do not stop there, as even after the Disbursement, there are various other charges that one has to cough up. Read on to know them as the Banks/NBFCs Never highlight them to the Potential Borrowers.

At the time of Loan Disbursement, You are handed over a Booklet containing the list of ‘Terms & Conditions’. The Borrower signs it immediately so as to get the much awaited Loan Amount Cheque in hand. Later, even after having read this list of ‘Terms & Conditions’, the detailed meaning of the fine prints are mostly not understood.

It is only later, when you approach the Lender to Cancel Disbursement, Change Rates, Make Prepayment/Foreclosure etc. that you understand the Implications of the fine prints of the ‘Terms & Conditions’ when you have to Cough Up Certain Fixed Charges for each one of them.

Charges:  Up to Home Loan Disbursement

1. At The Time of Loan Application. Loan Processing Fees up to 0.5% of the Loan Amount or Rs 2,000 whichever is higher plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

2. At The Time of Loan Application (NRI Loan). Loan Processing Fees up to 1.25% of the Loan Amount or Rs 2,000 whichever is higher plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

3. Loan Application Cancellation. Forfeiture of Processing Fees, Taxes and other Statuary charges paid.

4. Loan Sanction: Re-Appraisal after 6 Months. Processing Fees of Rs 2,000 for Re-Application plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

5. Loan Disbursement Fees. (SD/MOD/MOE)

6. Loan Cheque Disbursement Cancellation. Up to Rs 500 plus Taxes.

Charges:  After Home Loan Disbursement

1. Switching Charges.

(a) To Variable from Fixed Rate. Conversion Fees up to 0.5% of Balance Principle Outstanding and Un-disbursed Amount (if any) or a Cap of Rs 50,000 plus taxes whichever is lower.

(b) To Lower Rate from Variable Rate. Conversion Fees up to 0.5% of Balance Principle Outstanding and Un-disbursed Amount (if any) or a Cap of Rs 50,000 plus taxes whichever is lower.

2. Pre Payment Charges/ Foreclosure.

(a) Fixed Rate & Floating Rates.  No charges, if paid from own sources (Own Sources does not Include Loans borrowed from other Banks/NBFCs).

(b) Combined Rates of Interest.

(i) During Fixed Period. 2% of Loan Amount plus Taxes and Statuary Levies and Charges, as may be applicable from time to time on the outstanding amount being so prepaid.

(ii) During the Variable Period. No prepayment charges.

Home Loan Miscellaneous Charges.

(a) Increase/Decrease in Loan Term. Rs 500 plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

(b) Delay Payment Charges. A Maximum of 18% per annum.

(c) Cheque/ECS Dishonour . Rs 200 per dishonor.

(d) Photocopy/List of Documents. Up to Rs 500 plus Taxes.

Conclusion:

Banks offer loan for home at various Rates of Interest. In most cases they DO NOT explain the meaning of fine prints that are printed in the list of ‘Terms of Agreement’ in detail. The Borrowers only come to start understanding the implications of the fine prints of the ‘Terms and Agreement’ when they approach the Lender for Cancellations/Changes in Rates/Prepayment/Foreclosures of Loans etc. and are asked to cough up certain charges for each one of them. Therefore, it is pertinent that the Borrowers understand the Detailed Implications of the Home Loan Interest Rates and avoid unforeseen/unplanned charges.

Source: http://www.articles.seoforums.me.uk/Europe-UK-US-Article/miscellaneous-charges-home-loans