With rising property prices, home loan is the only solution when you want to achieve your dream of owning a home. And there is no dearth of home loan providers in India. You can get home loan for various purpose such as:
- House construction
- House (new or old) /land purchase
- Home improvement/renovation
- Home extension
However borrowers have to pay various other charges apart from the interest rate. Amongst them, processing fee is one such extra cost.
What is a home loan processing fee?
Every home loan application goes through a detailed evaluation before final approval. All these involve manual human intervention. So to cover up the cost, lender charge a processing fee.
It is a fee which is charged by the housing loan providers and may include multiple charges – legal, administration, application, technical evaluation and others.
This fee varies for each lender and there is a minimum and maximum fee applicable. Typically lenders take 7 -15 working days to process any application.
Listed in the below table is the processing fee (minimum fee – lowest to highest) charged by various home loan providers in India.
|Name of Lender||% Processing Fees of the loan amount||Minimum Fee (Rs.) excluding taxes|
|State Bank of India for all Central / State Govt. Employees||0||Nil|
|Punjab National Bank - Government Employees||0||Nil|
|Syndicate Bank - SYNDKUTEER SCHEME||0||Nil|
|Allahabad Bank for pensioners||0||Nil|
|Bank of Maharashtra (Waived off from 10Oct2016 to 31Dec2016||0||Nil|
|Central Bank of India - Cent Home Loan Plus||NA||Rs. 500|
|Jammu and Kashmir Bank||0.25||Rs. 500|
|Corporation Bank - GHAR SHOBHA||0.5||Rs. 1000|
|UCO Bank - Pre Approved Home Loan||0.25||Rs. 1000|
|UCO Bank - Home Loan||0.5||Rs. 1500|
|UCO Bank - Top-Up Home Loan||0.1||Rs. 1500|
|Canara Bank||0.5||Rs. 1500|
|State Bank of India||0.35||Rs. 2000|
|ICICI Bank||0.50% - 1.00%||Rs. 2000|
|ICICI Home Finance||0.50% - 1.00%||Rs. 2000|
|Vijaya Bank - Upto Rs. 10 Lakh||NA||Rs. 2000|
|HDFC (home loan, renovation, extension, plot, )||0.5||Rs. 3000|
|Allahabad Bank (other housing loan products)||0.31% - 1.22%||Rs. 3070|
|Karur Vysya Bank||NA||Rs. 3500|
|Vijaya Bank - Above Rs. 10 Lakh||NA||Rs. 4000|
|Dewan Housing Finance Limited||NA||Rs. 5000|
|IndiaBulls Housing Finance||NA||Rs. 10000|
|Axis Bank||Upto 1%||Rs. 10000|
|YES Bank||0.5||Rs. 10000|
|Central Bank of India - Cent Home Loan Scheme||0.5||NA|
|Corporation Bank - GHAR SANSAR||1||NA|
|Indian Overseas Bank||0.53||NA|
|Oriental Bank of Commerce||0.5||NA|
|Punjab National Bank - General Public||0.5||NA|
|Catholic Syrian Bank||0.5||NA|
|Tamilnad Mercantile Bank||0.5||NA|
|L&T Housing Finance||0.25||NA|
Note: In the above table NA denoted Not Available. You need to check with the bank to know the % fee.
Processing fee depends on the loan amount and purpose of loan (new house, renovation etc.). And higher the loan amount, higher would be the fee.
Remember that, in case the application gets rejected, not every lender will refund the processing fee. Only a certain percentage of fees is refunded. So it is best to get this clarified and get in written before giving money for further processing of the loan.
Additional reading – Tips on getting home loan easily.
One very important point to remember is that post Goods and Service Tax (GST) implementation; borrowers will have to pay marginally extra money. Earlier 15% service tax was applied on the processing fee. But after GST, the rate has gone up by 3% and borrowers will now have to pay a tax of 18%.
In addition to the processing fee, lenders also levy various other charges depending on the purpose of home loan (as mentioned above) taken. These charges further increases the burden on the borrowers.
Here are few of the charges/fees applied on home loan:
- Bounce charges
- Penal charges
- Foreclosure charges
- Pre-payment charges
- Converting interest rate from fixed to floating and vice-versa
- Cancellation of loan
- Advocate’s fee
- Valuer’s fee
- Stamp duty
- Loan transfer fee from one lender to another (most offer this free of cost)
- Prepayment statement
- Duplicate NOC
- Revalidation of NOC
Remember that your loan selection criteria should not be dependent only on the interest rate. The above listed extra costs also need to be considered to calculate the overall money outflow. There might be more additional fees as well, which you need to check with the lender before finalizing. But the above listed ones are most commonly charged.
Home loan is considered to be the most risky for any lender even though the lenders keep the applicant’s asset mortgaged with them. And in case of non-payment of EMIs; lenders have legal right to take any action on the said property and recover their money. And if this situation arises, your total loss would actually be very high considering the fact that you have paid interest and other rates and most importantly the loss of property.