Availing a home loan is the first step towards realizing your dream of building a house of your own. Other than the easy monthly installments, there would be few other minor expenses as well. You have to pay 10% - 20% of the value of your house as down payment. These are the other expenses that you have to meet while availing a home loan:
The processing fee, which is included as part of the application, is non refundable. You will have to pay this fee whether your application for the home loan gets sanctioned or not. The entire processing fee is divided into two parts. The initial login fee has to be paid along with the application form. This amount, which is non refundable, is used for the expenses that come up during the verification process of the application.
The rest of the processing fee would be incurred when you apply to release the allotted loan amount. The entire processing fee would be 0.5% - 2%. This would vary depending upon the firm and also the property that is purchased.
Legal and technical fee
Some financial institutions or firms may charge the legal or technical fee for the scrutiny of the documents of the property that you intend to purchase. All the documents would be scrutinized to make sure that it has been legally clear for the last 13 years. The technical scrutiny is done to determine the fair value of the properties and also to confirm whether the structure has been built by following the government rules and regulations. This fee would be between Rs 5000 and Rs 10000.
The GST (18%) would be charged by the institutions for all services offered in return for a fee.
Stamp paper expenses
After the loan has been sanctioned, the financial firm would ask you to buy the stamp papers to draw a contract between you and them. This would cost around Rs 300. However, this won’t be included in the processing fee.
Home insurance premium
It is mandatory that all those who are availing a home loan should insure the house. The home insurance premium amount would vary between 0.1% and 0.2% according to the value of the house. If the value of your house is Rs 3 lakh, then the premium amount would be 0.1%. It means that you would have to pay Rs 3000 as the premium amount. After the loan has been sanctioned, the premium could be paid as one time lump sum payment or as annual installment. However, all the leading financial firms would insist on paying the premium as onetime payment. This premium amount would be added to the loan amount as well.
The amount of the stamp duty or the broker charge of the property isn’t mentioned in this article. A home loan would be generally the biggest loan a person would avail in his lifetime. This may even push you into a huge, long time financial crises as well. So, having better knowledge about the extra expenses that would be charged while availing a loan would help you plan your financial affairs in a better way.
Chief Business Officer, Aadhar Housing Finance Limited