You should possess clear understanding of all the charges levied on home loans including the CERSAI fees, processing fees and more. This will help you stay prepared before you apply.
From CERSAI fees to processing fees, home loans often come with several associated costs that applicants end up ignoring. While applying for your home loan, it is definitely advisable to check and compare rates of interest, but you should also account for additional costs that are payable irrespective of the status of your home loan application. It is thus recommended that you compare these added charges along with rates of interest before you apply for your home loan with any financial institution or bank.
Additional charges for home loans- A brief guide
CERSAI charges are only one part of paying for additional costs while applying for your home loan. Here’s taking a look at the major extra charges that applicants are liable to pay on their home loans:
- Processing Fees- These are the charges for getting all the documents for appraisal of home loan applications and also underwriting costs. You can compare processing charges across banks and NBFCs and review these charges closely since they may not always contain a few additional processing costs for home loan applications. In such cases, these extra costs are payable over and above the basic processing charge. These fees are also non-refundable in spite of non-approval of the home loan application. Some lenders do provide processing fee waivers from time to time. The processing charges usually hover between 0.50-1% of the l oan amount.
- CERSAI charges- CERSAI equates to the Central Registry of Securitization Asset Reconstruction and Security Interest. This is a centralized Indian registry for mortgages, set up for tracking frauds related to mortgages where individuals attempt to obtain multiple loans against one asset from various banks. This is the platform for registered transaction filing in case of asset reconstruction, security interest for financial institutions and securitization needs. Lenders can get access to the registry for the asset in question by paying a charge which is taken from the borrower. The charge is payable irrespective of whether the home loan is finally approved or not. This is often called the MOD or memorandum of deposit of the deed fee.
- Administrative Costs- There are administrative charges levied on borrowers by some lending institutions. Non-refundable in nature, these fees usually cover verification and legal costs pertaining to the home loan application. There are em paneled agencies across banks and NBFCs which help in inspecting the technical and legal feasibility of the asset/property in question and preparing reports likewise. This plays a part in the bank’s decision to sanction a home loan.
- Late Payment- You have to pay late payment charges or penalties for not paying your home loan EMIs within the due date. Make sure that you do not miss out on paying your loan EMIs on time because the penalties may go up to 2% of the installment.
- Conversion- Whenever there is any drop in rates of interest, the applicant for the home loan will naturally want to convert/switch to the lower slab for interest. This is possible with the payment of the conversion charge/fee. The fee increases with any increase in the spread between the new rate of interest and the previous one. The home loan tenor is also reduced as a result.
- Pre-Payment- Several lenders have zero prepayment charges in case of floating rate home loans while some levy these charges on borrowers. The penalty for prepayment is applicable when you clear a part of your outstanding home loan amount in one go.
- LOD charges- Along with CERSAI fees, LOD (list of document) charges are also levied on home loan applicants. Lending institutions will take the original property documents prior to releasing the home loan. In the future, if the borrower needs his/her copy of the same, LOD fees have to be paid for this purpose. This charge usually hovers between Rs. 200-500 on an average. What you can do is carefully retain a copy of the original documents with yourself in order to avoid paying these fees.
If you are applying for a home loan anytime soon, make sure that you consider all the above mentioned additional charges which may lead to a higher burden on your pocket.
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