 Home > Finance Options
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Finance Options
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Home Loans
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A home loan comes with a plethora of expenses apart from the regular monthly repayments
in the form of EMIs. Hence, when shopping around for a loan, it is not sufficient
to merely compare the interest rates. A through comparison of other associated costs
and penalties must also be carried out, before deciding which loan is cheaper:
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Here are a few charges you should factor in.
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Application fee
Lenders charge a fee when you file in an application for a loan. This is a very
small fraction charged by the bank and is usually non-refundable.
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Processing fees
Processing your application for a loan involves variety of documents, analyzing
credit worthiness, doing a check on you credit history and verifying property documents.
There is a team of legal experts, finance experts and administrative staff doing
all this work. This cost is passed on to the prospective borrowers by most lenders.
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Interest on amount not disbursed
Banks disburse loans in installments through various stages of construction of a
house. Usually, interest is charged on the amount lenders may charge interest for
the entire loan amount. Get this clarified with the lender if you do not want to
pay interest on money not withdrawn.
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Pre-payment penalty
What would you do if you receive a windfall? Most people try to clear the debts
on their homes first, if they receive huge money from some other source. There is
always a desire to rid the house off the dangling loan as house emotional values.
Since banks would lose interest money on loans, they levy a penalty if borrower
tries to repay the loan ahead schedule. This is known as a pre-payment penalty.
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Fixed rates
Most borrowers lock themselves in fixed rates with the hope that there will be no
hike in their rate. Fixed rates are always a few points higher than floating rates
at that point in time. Many borrowers have had the shock of their lives when their
rates were revised and pushed up along with floating rates. Hence, be aware that
even in a fixed rate agreement, the force majeure clause empowers the institution
to increase the rate, if the market situation demands.
As observed, these costs are money charged towards processing and administrative
fees, the increase in the effective rates of interest due to the annual reducing
balance method, pre-payment charges, delayed payment charges, duplicate statement
request, bounced cheques and so on. Some banks also charge legal fees and technical
fees from the customers while others may include charges for stamp duty and registration
of the mortgage deed.
Apart from home loan and associated costs, you will have to pay property tax, registration
fees, association fees, maintenance deposits, wood work, furnishing and moving expenses.
You home is sum total of all these expenses. Ensure your budget for it all before
approaching a lender.
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Home Loans - Salaried
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- Application form with photograph
- Age Proof
- Residence Proof
- Photo Identity proof
- Income Proof
- Second Income proof
- Form 16
- Bank Statement
- Existing Loan details (RTR)
- Signature Verifation
- Processing Fee Cheque
- FI & Tele verification reports
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Home Loans - SEP
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- Application form with photograph
- Age Proof
- Residence Proof
- Identity Proof
- Bank Statement
- Existing Loan details (RTR)
- Signature Verification
- Processing Fee Cheque
- FI & Tele verification reports
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Home Loans - SENP
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- Application form with photograph
- Age proof
- Residence proof
- Identity proof
- Income proof
- Bank statement
- Existing loan details (RTR)
- Signature verification
- Processigng fee cheque
- FI & Tele verification reports
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