Home Loan Approved: Next Steps, Hidden Charges
While applying for a home loan, banks ask for many documents such as Income tax return for the last 3 years, bank statement for the last 6 months, salary slip of the company where you currently work, identification and address proof. And after lot of efforts, when home loan finally gets approved, people get happy and only thing they have in mind is paying their EMI regularly on time. But be careful! If you sit relaxed then you are making a mistake. Staying alert is very important otherwise you will end up losing money from your pocket unknowingly. Here are the steps to ensure home loan you have taken does not put a further hole in your bank balance:
- If you have opted 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. 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.
- Never stay relaxed irrespective of whether the lender is a nationalized bank or private. Make a habit to visit bank every 3 months to check the status of your loan amount. Or else make use of net banking facility to check the status time to time. Nowadays most of the banks have mobile applications which are handy to use and you get every details with the tap of your finger.
- Every year in the month of April visit your bank personally and get loan account details. Most importantly, how much you have paid and what is the remaining balance and whether you have been charged anything in excess.
- Don’t think that when you have high amount available then you can do pre-payment. Even if you have a small amount say Rs. 5,000 then make use of it and deposit in the loan amount. This way burden of loan will end early and you will more relax.
- Many times it happens that hidden fees are charged by the bank. For e.g. even if you pay EMI on time, the bank will charge late fee. In such cases you should contact your bank and ask for written explanation. Verbal communication/assurances are strictly NO because written document will act as a proof in case of future issue. Imagine loan officer with the bank verbally assures you that next month lesser EMI will be charged. However the loan officer resigns from the current bank and moves to some other bank and you find that the EMI amount remains the same. What will do in such a scenario? You will have no other option then to continue paying EMI.
Most common hidden charges are:
- Mark up fee or conversion fee
- Retrieval of physical copies of your loan documents
- Loan application processing administrative charges
- Legal fees
- Switching loan from fixed to floating or vice versa
- Increasing or reducing the loan term and many others
If you find that bank is charging you higher interest then immediately file a complaint and get it reduced. First check how much extra you were charged and ask your bank to reverse the amount from your ledger balance. If the bank does not act swiftly then go ahead and file an online complaint on the website of Reserve Bank of India: https://www.rbi.org.in/commonman/English/Scripts/AgainstBank.aspx