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Franking Charges for Home Loan

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Pradnya Ranpise

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Franking Charges for Home Loan

Buying a home in India involves more than just selecting a property and arranging funds. Several legal and financial formalities must be completed before the loan is disbursed. One such requirement is franking the loan agreement. This process helps validate the transaction and ensures your documents are legally acceptable.

Understanding what franking is, how franking charges for home loan are calculated, and how they vary across states is helpful. If you're applying for a home loan, knowing about loan franking charges can help you plan better and avoid delays.

What are Franking Charges

Franking charges are fees paid to mark a legal document as officially stamped, making it valid for legal and financial use. These charges apply to agreements like loan papers, sale deeds, or rental contracts. Franking is one way of paying stamp duty and acts as proof that the required tax has been paid.

Meaning and Purpose of Franking

Franking is the process of stamping legal documents using a special machine operated by authorised banks or agents. The stamp or mark confirms that the document carries valid stamp duty, as required by state law. In the context of property transactions, it helps make the agreement legally enforceable in court.

This method is widely used for sale agreements, loan documents, and other contracts that require stamp duty. The main purpose is to prevent forgery and ensure that legal documents have proper value in case of disputes.

How it Applies to Home Loans

When you take a home loan, the agreement signed between you and the lender must be legally valid. To do this, the document is often franked to confirm that stamp duty has been paid. This step is important before the loan amount can be disbursed.

Home loan franking charges are typically a small percentage of the loan agreement value, but the exact rate and process can vary by state. It is a one-time cost, separate from registration or notary charges.

Components of Franking Charges in Home Loans

Franking charges are part of the larger cost involved in completing a home loan agreement. Understanding the individual components helps you separate these charges from other legal and government fees.

Franking vs Stamp Duty

Stamp duty is a government tax levied on legal documents, especially those involving property transactions. Franking is simply one method of paying this stamp duty. Other modes include e-stamping and purchasing stamp papers.

The key difference is that franking involves physically stamping the document through an authorised bank or agent, while other methods may be digital or paper-based. In some cases, both franking and stamp paper may be used depending on local practices.

In essence, franking is a mode, while stamp duty is the actual tax. The franking charges on home loan usually form a part of the total stamp duty amount.

When is Franking Required

Franking is usually required when entering into a home loan agreement with a lender. It is mandatory in many states before the document can be registered or considered valid.

You may be asked to get your loan agreement franked before signing it, especially if your lender or state authority insists on physical proof of stamp duty. This applies when you're borrowing from banks, housing finance companies, or even when purchasing a resale property using a home loan.

In some cases, franking and notary charges for home loan may both apply, depending on state rules and the lender’s process.

State-wise Franking Charges in India

Franking charges vary across Indian states, depending on the local Stamp Act and administrative rules. Most states apply a nominal fee, either as a flat rate or a small percentage of the agreement value.

The table below provides an overview of estimated franking charges in India for home loan agreements:

State
Franking Charges
Remarks

Maharashtra

₹100 flat + 0.1% of loan amount (if applicable)

Franking must be done at authorised banks or sub-registrars.

Karnataka

0.1% of loan amount, up to ₹500

Franking is common for loan agreements and sale deeds.

Gujarat

₹50 to ₹300 flat (varies by bank/authority)

Depends on franking agent and loan type.

Tamil Nadu

₹100 flat

Required for MODT and loan agreements.

Delhi NCR

0.1% of agreement value

May vary across Delhi, Noida, and Gurugram.

Telangana

₹200 flat

Applicable before MODT registration.

West Bengal

0.2% of loan amount

Often used in place of e-stamping.

Punjab

₹200 – ₹500 flat

Depends on the loan size and property location.

Disclaimer: These charges are subject to change as per local rules. Always check with your local sub-registrar office or lending institution for the latest applicable rates.

Knowing your state's specific rules helps you plan for home loan franking charges well in advance, avoiding last-minute hurdles.

How to Pay Franking Charges and Get a Loan Agreement Franked

Paying franking charges for home loan is a straightforward process but must be done through authorised channels. The method may differ based on the state and institution involved.

Here are both online and offline processes explained:

Offline Process

  1. Visit a bank or government sub-registrar office authorised for franking in your area.

  2. Carry Required Documents home loan agreement, ID proof, PAN card, and payment details.

  3. Pay the applicable franking charges to be paid via cash, cheque, or demand draft depending on local policy.

  4. Get the franking stamp applied. A franking machine prints a red or blue stamp on the first page of your agreement. This confirms stamp duty has been paid.

  5. Sign the agreement after franking is completed. This is crucial for legal validity.

Online Process (where available)

  1. Visit the SHCIL Portal shcilestamp.com or State E-Stamping Site. For some states like Delhi or Karnataka these portals are available.

  2. Select document type (e.g., loan agreement) and enter value and party details.

  3. Use UPI, net banking, or cards to pay the stamp duty online.

  4. Download e-Stamp certificate as it acts as proof in place of physical franking. Submit it along with your loan documents.

Note: Not all states allow full online franking. Confirm with your lender or legal advisor before proceeding.

Is Franking Mandatory for Home Loans

Franking is not mandatory in all states, but it is often required by banks or housing finance companies to legally validate the loan agreement. Whether or not you need to frank your documents depends on:

  • State regulations

Some states accept e-stamping or stamp papers instead

  • Lender requirements

Many lenders ask for franking as proof that stamp duty has been paid

  • Document type

Franking is commonly needed for Memorandum of Deposit of Title Deeds (MODT) and other key legal documents in a home loan process

If you are in a state where franking charges on home loan are enforced, skipping this step can lead to delays in disbursal or problems during property registration.

Conclusion

Franking is a crucial step in the home loan process in many parts of India. It legally validates your loan agreement by confirming stamp duty payment. Though not always mandatory, lenders often insist on it to ensure compliance with legal norms.

The franking charges in India are generally nominal but vary by state and institution. Knowing the correct process, whether online or offline, can help you avoid unnecessary delays during disbursal. Before signing your agreement, always confirm if loan franking charges apply and follow the steps prescribed by your lender or local authority.

FAQs on Franking Charges for Home Loan

What are franking charges in a home loan?

Franking charges are fees paid to stamp your loan agreement, confirming that the required stamp duty has been paid to the government.

Stamp duty is a tax on legal documents. Franking is one way to pay that tax, using a special machine to mark the document.

Most states charge 0.1% of the loan amount, up to a fixed cap. Some states may apply flat fees, such as ₹100 or ₹200.

No. Some states use e-stamping or stamp papers instead. Always check with your state authority or lender before proceeding.

The borrower usually pays the franking charges as part of the overall home loan documentation cost.

You can pay them at authorised banks or sub-registrar offices offline, or via state-approved e-stamping portals where available.

It depends on the state. Charges range from ₹100 to 0.2% of the agreement value. Confirm the exact fee with your local authority.

Multiply the agreement value by the applicable state percentage, or check the flat fee fixed by your state or franking agency.

No. Once paid, home loan franking charges are not refundable, even if the loan is not disbursed or cancelled later.

Franking is time-bound, must be done before signing, and is limited to authorised locations. It may not always be available online.

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Hi! I’m Pradnya Ranpise
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Pradnya has over 5 years of experience in content marketing, with certifications from both SEMrush Academy and HubSpot Academy. Having worked across multiple industries, she has now honed her focus on the finance sector, covering topics such as insurance, loans, investments, and payments. She is known for breaking down complex financial topics into simple, clear content that empowers readers to make informed decisions.With a genuine passion for helping people understand their finances, Pradnya’s expertise shines through her work, as she delivers trustworthy, authoritative content backed by real industry knowledge.

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