Taking A Home Loan? There's More To Pay Than Just Interest Rate

 Home loan interest rates are currently low, and many consumers may be considering taking out a loan to take advantage of the cheaper rates. The majority of us are just concerned with the interest rates on offer. However, there are additional fees that apply to home loans and raise the overall cost of borrowing. Here's a breakdown of the most important fees associated with a house loan, including interest.

Interest Rates  

The amount a lender charges a borrower in interest is expressed as a percentage of the principal.

Here are the interest rates charged by some of India's most well-known lenders. These rates are illustrative and will vary depending on the loan applicant's data, such as kind and location of job, loan amount, age, and number of applicants. There may also be continuing special offers.

State Bank of India (SBI), India's largest public sector bank, currently charges interest rates ranging from 6.90 percent (on loans up to Rs30 lakh) to 7.00 percent (above Rs30 lakh).

HDFC levies a 6.70 percent fee (up to Rs 30 lakh). However, for loans greater than Rs 35 lakh, the interest rate varies, but the general rate begins at 7% per annum.

PNB provides 6.95 percent (up to Rs 30 lakh) and 7.20 percent (up to Rs 30 lakh) (Rs 35 lakh and above).

The interest rates offered by Axis Bank differ for self-employed and salaried individuals. According to Bankbazaar.com, the rates for the former are 7.95-8.55 percent per year, while the rates for the latter are 6.90-8.40 percent per year.

Processing Fee 

At the lender, all loan applications go through a credit underwriting process. During this process, the applicants' information is scrutinised for factors such as creditworthiness, legal status of the property, and more. Because this requires time and resources, the lender assesses a processing fee that covers all costs associated with the underwriting procedure.

Processing fees vary depending on the bank. SBI, for example, charges 1% of the loan amount, with a minimum charge of Rs 1,000 and a maximum charge of Rs 10,000. Borrowers with HDFC are required to pay up to 0.50 percent of the loan amount or Rs 3,000, whichever is greater. According to bankbazaar.com, PNB charges up to 0.35 percent, with a minimum of Rs 2,500 and a maximum of Rs 15,000 being charged.

Lenders may occasionally waive processing fees to entice borrowers. It is important to note that paying the processing fee does not guarantee that your loan application will be granted.

MOTD Fee 

A Memorandum of Deposit of Title Deed, or MOTD, is a document signed by the applicant that states the property has been pledged to the bank in accordance with the customer's wishes in order to obtain a house loan. This effectively means that once you've paid back the lender, you'll have complete ownership of the house or property for which you took the loan.

This document is subject to a stamp duty, which varies by state. It is usually between 0.1 and 0.2 percent of the total loan amount.

Conversion Fee 

A conversion fee is usually charged when transferring an existing home loan to a new lender. Home loans are a competitive industry, and you may be able to find a lender with better rates than your present lender. As a result, you may want to consider refinancing your loan to take advantage of more competitive and inexpensive interest rates. According to Paisabazaar.com, SBI, for example, imposes a 0.50 percent conversion fee. The conversion fee charged by Bank of Baroda is 0.50 percent of the outstanding principal plus taxes, with a maximum of Rs 25,000.

Prepayment Fee

Most house loans have prepayment options, which allow you to pay off the loan before it reaches the end of its term. You can choose to make partial prepayments or pay off your entire mortgage. The majority of lenders do not impose any prepayment penalties. However, prepayment or preclosure fees may apply to some fixed-rate loans. Before you take out a home loan, be sure you understand the prepayment rules. There may be a limit to how much you can pay in advance. 

Stamp Duty 

This rule applies to any legal document that requires signatures on stamp paper and constitutes a transaction between the borrower and the lender. The stamp duty is calculated based on the actual costs incurred.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more.