Home loan hidden charges

Q: What are the hidden charges I should take care of before taking home loan from a bank?

CF User,

12th February 2014

Home Loan in Mumbai

home loan

home loan in mumbai

home loan hidden charges

processing fee

franking charges

mod charges

cersai charges

memorandum of deposit of title deed

document retrieval charges

administrative charges

legal fees

documentation charges

recovery charges

pre-payment charges

late payment charges

franking charges for home loan

franking charges on bank loan

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Before taking the home loan following are the hidden charges which should be taken care of
Conversion fee is the paid when you switch your loan from one type to another. This is the amt you need to pay for decreasing interest rate throughout the loan tenure. For example, if a home loan was taken by you at 13 percent which is 10 percent base rate with an additional 3 percent mark up, but overtime your bank is offering loans at just 10.35 percent and you still pay 13 percent, you can reduce your rate of interest by decreasing the 3 percent mark up to 0.35 percent. But the banks will charge for this conversion and that is called conversion charges.

The late payment fee is paid when the EMI payment is delayed. The borrower is supposed to pay a Late Payment fee of Rs. 500 or 2 percent additional interest per month as penalty.

If you fail to make payment of EMI for a month or so, the bank has to undergo few technical procedure to recoup the cost by charging add recovery charge.

Shipra Aggarwal,

30th August 2018

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Shipra Aggarwal,

30th August 2018

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Where I can get the Franking stamp in Hyderabad for loan agreement and how much will be the price for franking stamp.

Mudassir Syed,

15th September 2017

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IIFL take franking charge 10000 (overall ) is it applicable or not or I go other home loan department ???

rony, Mumbai

1st June 2017

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Hi folks,
Sometimes banks and financial institutions included charges such as technical fees, legal fees, valuation fees all put together can add up to more than processing fees. And if processing fees have been waived, you may still have to pay other fees. As against this another lender that charges processing fees, but not other fees, may be cheaper. So, think twice before being trapped.

Meghna Ananth, Mumbai

16th June 2016

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Apart from that, legal fees or advocate fees are charged for property search and the title investigation report. Valuation fees are charged for valuation report. In many cases, these are not refundable because the lender has incurred charges for providing these services.

Some lenders charge a separate login fee that may be non-refundable. While some others may deduct it from the processing fee. In some cases the lender may take the cheque upfront but does not encash it unless the loan is approved.

Hitesh Thawani, Mumbai

16th June 2016

Hi all,
My question is do we really need to do Franking for a Sale Agreement & Construction Agreement separately? Only on Sale Agreement is enough or on both the agreements have to do the Franking. What is the procedure for the Franking and Cost related to the same? Who is going to do i.e builder is going to do on purchaser behalf or the purchaser has to bear the expenses of franking?

Mansoor Bithal, Mumbai

4th September 2015

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@Mansoor!!!
Now-a-days most of the builders do agreements separately for sale and construction and the same is registered in the respective reg office. The builder will do the franking but purchaser will bear the cost. Cost will be in few thousand rupees only. If you are going for a bank loan then it will be a bit more.

Vinay Dixit, Mumbai

4th September 2015

What is Franking Charges for Home loan in ICICI Bank

ajay, Mumbai

21st August 2015

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Franking charges is getting the document stamped with the requisite stamp duty applicable in that particular state for that particular transaction. It was introduced in Maharashtra also to avoid the sale of bogus stamp papers. It is convenient and safe.

Chintakpujara, Mumbai

24th August 2015

Right Chintak,
It is a process wherein an authorized Bank/ franking agency puts a stamp on your document indicating that the stamp duty has been paid. Before executing the transaction (of buying a property) i.e. before signing on the document, one can approach an authorized Bank/ franking agency and deposit the required stamp duty at their counter. Once the stamp duty is paid, the authorized officer can Frank with special adhesive Stamp by Franking Machine that is intended for stamping such documents.

Vinay Dixit, Mumbai

24th August 2015

Hi every body,
It is very important for you if you are taking any home loan. If you have selected for floating interest rate then always pay attention when RBI increases or reduces the interest rate. First thing you need to check is whether the updated rates are reflected in your bank account or not.

Kishore Pathak, Mumbai

14th July 2015

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Right Kishore,
Whenever interest rate is increased then banks also change the interest rate on your loan account. On the other hand when rates are reduced, banks may not make changes in their system and will continue to charge you with an old rate. In such cases, you should always keep updated on latest happenings especially the announcements by RBI and contact your bank immediately in case of any query.

Shaunak Verdla, Mumbai

14th July 2015

Hi Guys,
As soon as one starts looking out for property to buy a house, banks start offering home loans. For a loan amount up to Rs 30 lakh and the tenure being 15-20 years, the following is on offering. Floating interest rate 10.15%. This rate is being offered by SBI, ICICI Bank, HDFC Bank, HSBC Bank, Axis Bank, PNB Housing Fnance, DHFL, India Bulls, Citi Bank, Tata Capital Housing Finance Ltd. EMI per lakh works out to be Rs 975.

Shaunak Verdla, Mumbai

24th June 2015

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Hi Shaunak,
If i take a loan from these banks what will be the processing fee?

Vinay Dixit, Mumbai

24th June 2015

Well Vinay,
SBI charges a processing fee of 0.25% of the loan amount up to Rs 25 lakh or minimum Rs 1000. For a loan amount above Rs 25 lakh the processing fee is Rs 3250. Citibank charges 0.25% of the loan amount. ICICI, HDFC and PNB charge 0.5% of the loan amount as processing fees.

Shaunak Verdla, Mumbai

24th June 2015

However, HDFC has capped the maximum amount to Rs 10000. Whereas, Axis Bank and HSBC charge a minimum processing fee of Rs 10000 or 1% of the total loan amount. DHFL charges Rs 5000 plus document charges and taxes and India Bulls charges Rs 7500 plus taxes.

Sandeep Mhatre, Mumbai

24th June 2015

Right Sir,
Home Loan hidden charges is a dull area & there are no clear cut rules regarding same. In India, transparency takes a back seat and regulatory bodies are also turning blind eye towards Home Loan hidden charges.

Shreya Agarwal, Mumbai

13th May 2015

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Shreya is absolutely right,
There is no standard definition of home loan hidden charges as banks keep moulding the definitions as per their convenience. Here are the list of hidden charges asked by the bank upon their loan, These are Conversion Fees, MODT Charges, Document Retrieval Charges, Administrative Charges, Legal Fees, Valuation Fees, Inspection Fees, Documentation Charges, Switching Loan Package, Recovery Charges, Pre-Payment Charges and Late Payment Charges.

Ashish Bhoite, Mumbai

13th May 2015

Home loan application to a bank attracts the following charges.

Processing Fee: Unlike all other loans Home Loan processing fee is paid along with the application for Home Loan. This is because the bank spends the fee in getting the Legal and Valuation done on the property that you are proposing to purchase and hence the money is charged upfront. The PF varies from bank to bank and may be a flat fee or a Percentage of the loan amount. Most banks like ICICI/HDFC/Axis charge a flat fee of 10K plus service tax for all salaried customers regardless of the loan amount and charge 0.5% of the loan amount as PF for Self Employed customers. So you have to check as to what is the PF that has to be paid upfront.

Franking Charges: the Loan agreement that you sign with the bank has to be franked for anywhere between 200Rs to 900Rs max, sometimes it needs to be notorised as well and that will cost you a extra Rs 200. But in total this charge cannot be more than a 1000Rs in total, some banks will get you to sign a pre franked agreement and some will charge you for the franking so its better to account for a rough 500Rs to 100Rs on franking of the loan agreement

MOD charges: Almost all Indian banks charge 0.1% of the loan amount as MOD charges, this is either deducted out of your loan amount or you may have to buy a E Stamp paper for an equivalent amount and submit it to the bank

CERSAI charges: Banks charge you 500Rs plus Service tax as CERSAI charges as well.

Beyond this Ideally there should not be any other charges at the time of taking a home loan.

Finance Buddha,

12th February 2014

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