More than 50% of people avail a home loan while buying a new house. With high real estate prices, for many citizens, buying a home would remain a dream unless they avail a loan from banks or financial institutions. Home loan funds up to 80% of the cost of the property and it is taken for the period of 15 to 25 years. As a home loan is taken for a long period of time, there are certain things which need to be taken care of, while availing a home loan. Many borrowers consider interest rate as the most important thing while evaluating options, but there are many other charges which people are not aware.
Repayment mode is the method through which home loan EMIs are repaid. While repaying a home loan, many people request their lenders to change their existing mode of repayment. While some people prefer to pay their EMIs through post-dated cheques, some prefer the ECS mode. In case you want to switch your loan repayment mode, your lender will charge money. This fee varies across lenders. Fees can go up to Rs 500 for the change.
The franking charge is also called the stamp duty fee. Usually, lenders levy this fee while processing home loan applications. It is a tax levied by the State Government on the location of the property. This charge is levied on all forms of monetary transactions involving the transfer of rights of a property. The charges vary from state to state, based on the type of property, location and state laws.
In case you miss paying EMIs or default on your loan, you will have to pay charges on it. The interest charges can be as high as 2% a month (24% a year) on the outstanding amounts. This is over and above the existing interest rate on your home loan. So, before availing a loan, it is advisable to know financial capability. You must avail a loan only if you are capable of repaying on time.
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4. CERSAI Charges
With the intention of preventing frauds which occur due to multiple loans being taken on the same property from different lenders, the organization called CERSAI (Central Registry of Securitization Asset Reconstruction and Security Interest) was created.
CERSAI contains all information on mortgages or loans that have been taken on an asset or property. It also contains the information on lenders who have sanctioned the loan on the property along with borrower details.
According to the rules, each lender has to register all information with CERSAI, vis-a-vis security interests that have been created. Registration should be done within 30 days of the creation of security interests.
So, the borrower of a home loan will be charged money for this process. For a loan amount up to Rs 5 Lakhs, a fixed fee of Rs 50 will be charged.
You will be charged money if you fail to maintain sufficient funds in your bank account to pay the EMIs on the particular date. In such cases, banks usually charge up to Rs 500. It varies across lenders.