Home Loan Processing Fees and Charges in 2025

Home loan processing charges are one-time, non-refundable fees that lenders collect for evaluating your loan application. These fees typically range as a percentage of the loan amount and apply whether your loan is approved or rejected. They cover costs such as document verification, property appraisal, and administrative checks. 

These charges are separate from interest rates and other loan-related expenses, so you should consider them before applying. On Bajaj Markets, you can find various lenders charging minimal home loan processing fees, making your loan more affordable.

Calculation Method:

Home loan processing fees are usually calculated as a percentage of the loan amount. For example, if the processing fee is 1% and your loan amount is ₹10,00,000, the processing fee will be ₹10,000.

Typical Range:

The processing fee typically ranges between 0.5% to 2% of the loan amount, depending on the lender. Some lenders may also have a flat fee structure.

Variations:

Processing fees can vary based on several factors, such as the lender’s policies, the type of loan (e.g., home loan, top-up loan), and your credit profile. Additionally, special offers or promotional periods may reduce or waive these fees.

Payment:

Processing fees are usually paid at the time of loan application submission or once the loan is sanctioned. This amount is typically deducted from the loan disbursement, or you may be asked to pay it upfront, depending on the lender's policy.

The processing fees cover several administrative and verification services to ensure your application and property details are accurate. These may include: 

• The evaluation of your application, verification of your documents, and credit checks

• Legal checks and an independent valuation of the property’s market value

• Technical verification, risk analysis, or services related to digitisation 

There are numerous home loan charges apart from the processing fee. Knowing these associated costs is crucial to assessing your finances properly and being clear about what you need to pay. Here is a look at some common types of charges:

• Home loan-related fees
• Documentation-related fees
• Legal charges
   

Here is a deeper look at each of these types of home loan charges. 

Home Loan-related Fees

Here are some common fees you may encounter in your home loan journey from the time of application and during repayment:

1. Login Fee

• What it is: A one-time, non-refundable amount charged at the time of home loan application.
• How it's calculated: Typically a fixed amount, ranging from ₹500 to ₹5,000 depending on the lender.
• When to pay: Paid at the time of application. Once your loan is approved, this fee is adjusted against the total processing charges, so you only pay the balance amount.

2. Collection / Recovery Charge

• What it is: This charge applies if you default on repayment and the lender initiates legal action. It typically includes actual recovery costs plus an additional penalty fee.
• How it's calculated: The fee may be a percentage of the overdue amount or a fixed sum. It could also include the costs of legal proceedings and recovery services.
• When to pay: Paid if legal action is taken due to loan default and recovery efforts are initiated.

3. Late Payment Fee

• What it is: Charges incurred if you fail to make your EMI payments on time.
• How it's calculated: Typically, a percentage of the overdue EMI, which can range from 2% to 3% of the unpaid EMI.
• When to pay: Paid if your EMI payment is delayed beyond the due date, added to your next payment.

4. Prepayment Charge

• What it is: A charge for paying off the home loan in full before the end of the tenure.
• How it's calculated: Usually calculated as a percentage of the outstanding loan amount, ranging from 1% to 2%.
• When to pay: Paid at the time of full prepayment of the loan.

5. Partial Prepayment Charge

• What it is: A charge for prepaying a part of the loan balance before the due date.
• How it's calculated: Typically, a percentage of the amount being prepaid, generally 1% to 2%.
• When to pay: Paid at the time of making a partial prepayment.

6. Other Charges

• What it is: Additional charges may apply for various services, such as insurance premiums for securing the loan or the property.
• How it's calculated: Insurance charges are based on the loan amount and the type of coverage. Application fees may also be charged separately.
• When to pay: Insurance charges are paid at the time of loan disbursal; application fees are paid during the application process.

7. Switching Fee

• What it is: A charge if you choose to convert your home loan type (e.g., from floating to fixed-rate or vice versa) during the loan tenure.
• How it's calculated: Can range from ₹1,000 to ₹10,000 or more, depending on the lender.
• When to pay: Paid when you request to switch the type of your home loan.

8. Repayment Mode Change Fee

• What it is: A fee if you switch the mode of paying your EMIs, such as from post-dated cheques to electronic payments.
• How it's calculated: A fixed fee ranging from ₹500 to ₹2,000 depending on the lender’s policy.
• When to pay: Paid when you request a change in the repayment mode.
  
  

Home Loan Fees and Charges for Documents

Here are some common fees related to the paperwork and documents involved in your home loan:

1. Stamping Charge

• What it is: Charged during the stamping of legal documents.
• How it's calculated: Usually a fixed fee based on the state-specific stamp duty rates, which may vary based on the property value.
• When to pay: Paid during the loan disbursal process when the documents are being legally formalized.

2. Income Tax Certificate Charge, Interest Certificate Charge, CIBIL Report, NOC, No Dues Certificate, Duplicate Copies

• What it is: Charges for providing various certificates and documents like income tax certificates, interest certificates, CIBIL reports, NOCs, or duplicate copies.
• How it's calculated: Some banks offer these for free, but others may charge a nominal fee for issuing such documents.
• When to pay: Paid when requesting the documents.

3. Document Retrieval Charges

• What it is: A charge for retrieving the original documents or titles once the loan is fully repaid.
• How it's calculated: A fixed fee may be levied or it may vary depending on the lender’s process for document retrieval.
• When to pay: Paid when you request the return of the original documents after loan closure.

4. Agreement Copy Fee, Duplicate Statements Fee, Amortisation Schedule Issuance Fee

• What it is: Charges for obtaining a copy of the loan agreement, duplicate statements, or amortization schedules.
• How it's calculated: These may range from ₹100 to ₹1,000 per document, depending on the lender.
• When to pay: Paid when you request these documents.

Legal and Government Charges for Home Loans

The lender may also pass on certain charges related to legal services and government-mandated fees to you. These may include:

1. Legal Fees

• What it is: Charges for legal services, including drafting home loan agreements and other legal documentation.
• How it's calculated: Usually based on actuals, depending on the complexity of the documents and the legal service provider.
• When to pay: Paid at the time of loan processing when the loan agreement is drafted.

2. Verification Fee

• What it is: Charges for verifying the details of the property you wish to buy with the loan.
• How it's calculated: It may include costs for property inspection and valuation.
• When to pay: Paid when the lender conducts property verification before loan approval.

3. Other Legal Charges

• What it is: Charges for creating a Memorandum of Deposit of Title Deed (MoD) or other legal documents as required by the lender or government.
• How it's calculated: These charges vary depending on the state in which the property is located.
• When to pay: Paid during the property registration process and when creating legal documents.

4. CERSAI Charge

• What it is: A government-mandated charge to prevent the misuse of loan facilities using a single property.
• How it's calculated: The CERSAI charge is a fixed amount levied on all home loans for registration of the loan documents.
• When to pay: Paid when the loan documents are registered and the loan is sanctioned.

When and How to Pay Home Loan Processing Fees

Home loan processing fees are charged by lenders to cover the costs of evaluating and processing your loan application. Understanding when and how to pay these fees is essential to ensure a smooth loan application process. Here's a detailed breakdown:

1. When to Pay Home Loan Processing Fees

• At the Time of Application: Most lenders charge the processing fee when you submit your home loan application. This is a one-time, non-refundable fee that you need to pay upfront.
• Upon Loan Approval: In some cases, the processing fee is collected only after your loan is approved. However, this will be communicated to you by the lender, and it is important to ensure that the fee is paid promptly after approval.
• Adjustment Against Other Charges: Some lenders may adjust the processing fee against the overall loan charges. If this is the case, you will pay the remaining balance after approval or disbursal.

2. How to Pay Home Loan Processing Fees

• Online Payment: Many lenders offer the convenience of paying the processing fee through their website or mobile app. You can make the payment using debit/credit cards, net banking, or UPI.
• Cheque/Demand Draft: Some lenders may accept payment via cheque or demand draft, especially for those who prefer offline payments. Ensure that the cheque or DD is drawn in favor of the lender as per their instructions.
• Cash Payments: Although less common, some lenders may allow cash payments for processing fees. Always get a receipt for the cash payment to avoid future issues.

3. Important Considerations

• Non-Refundable: The processing fee is non-refundable, even if your loan is rejected. It is important to ensure you meet the eligibility criteria before applying to avoid this fee being charged without approval.
• Fee Variations: Processing fees may vary depending on the lender, loan amount, and type of loan. It is advisable to confirm the exact fee amount and mode of payment with the lender before submitting your application.

In summary, home loan processing fees are an essential part of the application process. Ensure you pay them on time and via the appropriate method as per your lender's instructions.

Home loan processing charges can vary depending on several financial and policy-related aspects. Here are the major factors affecting what you pay: 

• Loan Amount: Higher loan amounts often attract higher fees due to increased evaluation and documentation
• Lender’s Policies: Each lender sets its own rules, and some may offer discounts or promotional waivers
• Credit Profile: Strong credit scores may lower the processing fees charged, while weaker profiles may face higher charges
• Types of Property: Fees differ for under-construction vs. ready-to-move properties, with the former usually higher
• Loan Tenure: Longer tenures involve more monitoring and risk, leading to higher charges
• Negotiation: Borrowers may negotiate or get waivers, especially if they have a prior or existing relationship with the lender 
• Market Conditions: In inflationary or uncertain times, fees may rise, and in stable or low-interest periods, lenders may reduce these fees to attract borrowers

Apart from the basic processing fee, banks may levy additional home loan fees and charges during the home loan process. Here are the key ones: 

• Administration Fee: Some lenders split charges into processing and administration fees. The latter is charged after sanctioning the loan
• GST on Loan Services: GST is applicable on processing, administrative, legal, and technical assessment fees
• Fee for Change of Tenure: Charged if you extend or reduce your repayment period after opting for a loan
• Re-sanction Charges: Applied if the loan sanction expires and needs re-approval due to delays
• Cheque Bounce Charges: Penalty imposed when a cheque towards EMI or fees is dishonoured
• Incidental Charges: Levied to cover recovery expenses if the borrower defaults on payments

 

When applying for a home loan, read the terms and conditions carefully to avoid unexpected charges. For convenient and competitive home loan options, visit Bajaj Markets. Apply online to secure a favourable offer from leading lenders.