What are the processing fees and other charges on a home loan?

A home loan usually carries a processing fee, which is often a small share of the loan amount, along with charges for legal and technical checks, insurance, stamp duty on the loan agreement and other items. Fees differ by lender, so ask for the full fee schedule in writing.

Charges at the start

• A processing fee is charged by most lenders, commonly as a fraction of one per cent of the loan or a fixed amount, and it is often not refunded if the loan is rejected.
• Legal and valuation charges cover the lawyer's check of the title and the valuer's visit, and these may be charged even if the loan does not go ahead.
• Other items can include a charge for the CERSAI registration of the mortgage, stamp duty on the loan documents and an administrative fee.

Charges during the loan

• Some lenders charge for a conversion from fixed to floating, a change in the tenure or a rate reset, so check the terms.
• Late payment of an EMI attracts a penal charge and harms your credit score, so pay on time.
• Insurance premiums, if you choose a loan protection plan, are an extra cost, and you should check whether it is compulsory or optional.

Charges at the end

• For floating-rate loans to individuals, RBI rules do not allow prepayment charges, but fixed-rate loans can carry them, so check your agreement.
• Ask for the fee for a no-dues certificate, a statement or the release of the original documents, if any.
• Compare the full costs of lenders on the home loan page, and use the EMI calculator to see the real cost of the loan.

Fees can change the real cost of a loan. Ask for a written list, compare the totals and read the fine print before you accept the sanction.