BankBazaar | Hidden costs in a home loan!

BankBazaar | Hidden costs in a home loan!

Hidden costs in a home loan!

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A processing fee is used to take care of the costs involved in processing a loan application. This includes verifying your Credit Score, Credit history, income and other details. The lender will have to spend time, money and effort to do this. So, any processing fee that you pay will not be refunded unless it is specifically mentioned by the lender. In case your processing fee was waived off and you got a Home Loan which you didn’t take, the lender might actually ask you to pay the processing fee.

Banks have been instructed by the Reserve Bank of India (RBI) not to include stamp duty and registration as part of Home Loans that they grant. However, if the Home Loan amount is less than Rs. 10 lakh, then the stamp duty and registration charges can be funded by the bank, says RBI.

Memorandum of Deposit of Title Deed (MOST) is an undertaking by you as the borrower and will state that you have deposited the title documents of the property with the bank at your will, in order to get a loan from the bank. You will need to register this document. So, stamp duty charges will apply and these are often known as title deed charges. These charges will vary from one state to another but is normally between 0.1% and 0.2% of Home Loan amount. Lenders might not inform you about these charges. So, it is best for you to ask about these before you go for the Home Loan.

So, keep these points in mind while applying for a Home Loan.

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BB Expert