Thinking of taking a Home Loan? Here are a few charges and fees you will need to pay before you get your dream home. Read on to find out all the associated charges that come with a Home Loan.
A Home Loan involves various other expenses apart from the loan EMI. Before you check your eligibility for a Home Loan and start the application process, glance through this list expenses associated with a Home Loan.
The processing fee is the most common fee that is included as a part of your Home Loan application. You will need to pay the processing fee at the time of submitting your Home Loan application. This fee is non-refundable.
Legal Advisor Fee
When you decide to buy a home and get a Home Loan, you will have to get your new property’s papers reviewed by a lawyer. The lawyers will check the title of the property along with records of past ownership. You will need to pay a fee for the services of a legal advisor. Buying a property that is part of a pre-approved project? Then your legal fee will be lower. The legal fee generally varies between Rs. 1,000 to Rs. 3,000.
Additional Reading: Your Home Loan Document Checklist
Service Tax on Bank Fees
Service Tax will be charged by the bank in addition to the bank fees that you will need to pay.
The stamp duty is the fee that you pay for the legal document on which your Home Loan agreement is recorded. You will need to buy the stamp paper and this fee is charged only once your Home Loan is approved by the bank.
Home Insurance Premium
If you take a Home Loan to finance the purchase of your house, it is necessary to insure your home with Home Insurance. How much is that, you ask? Let’s say you chose a property worth Rs. 40 lakh. The Home Insurance premium for the property would add up to approximately Rs. 8,000 per year. The Home Insurance premium can be paid either as a onetime payment for the duration of the loan or as a yearly payment.
Home Loan Insurance Premium
What’s that? Home Loan Insurance insures you against the liability of a Home Loan. This is a considerable expense if you choose to get Home Loan Insurance. Let’s say you take a Home Loan for Rs. 30 lakh, over a tenure of 25 years. The Home Loan Insurance premium would come to approximately Rs. 1 lakh, as a lump sum payment. This will get added to your Home Loan amount. However, the premium amount differs according to the loan amount, tenure of your loan and the insurance provider. If your tenure reduces, so will the premium amount.
Home Loan Insurance will not be necessary if the lending bank requires you to have a guarantor for the loan. If you don’t have a guarantor who can vouch for you, Home Loan Insurance will be your only option.
So before you dive into a Home Loan, remember it is a long term and big financial commitment which would require several miscellaneous expenses apart from the loan EMI.
Additional Reading: Dos & Don’ts For Home Loan Prepayment
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