Processing Fees of Home Loan

Home Loan Processing Fees

Check details about processing fees of home loan and different types of charges & fees on home loans

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Buying a home is the ultimate Indian dream. But, it is an expensive dream, and many times people apply for a home loan to help them achieve their dream. Now, when you take a home loan, the most obvious expense that you would have to take note of are the interest rates. Apart from that, one of the most significant charges you will be required to pay is the home loan processing fee. This is, typically, a one-time fee levied by the lender as part of the application processing charges for home loans. Let us examine the different important aspects of home loan processing fees.

Home Loan Processing Fees of All Banks

In most cases, the processing fees of home loans is a percentage of the overall loan amount sought. In other cases, a minimum / maximum / standard fixed amount may be chargeable. However, this can vary from different lenders. Here is a table to help you understand and compare the home loan processing fees charged by some of the prominent Indian banks, in alphabetical order.

Bank Name

Home Loan Processing Fee %

Home Loan Processing Fee Amount

Axis Bank

1.00 %

Rs. 10,000

Bandhan Bank

0.25 %

-

Bank of Baroda

0.25 %

Rs. 8,500

Bank of India

0.25 %

Rs. 1,500

Canara Bank

0.50 %

Rs. 1,500

Central Bank of India

0.50 %

Rs. 20,000

DBS

-

Rs. 10,000

HSBC

1.00 %

Rs. 10,000

HDFC

0.50%

Rs.3,000

IDBI

0.50%

Rs.2,500

IDFC First

-

Rs.10,000

Kotak

0.50%

-

Punjab National Bank

0.35%

Rs.2,500

State Bank of India

0.40%

Rs.10,000

Union Bank of India

0.50%

Rs.15,000

Yes Bank

2%

Rs.10,000

Disclaimer: Interest rates & charges are subject to change depending on market conditions and the bank’s discretion.

It is noteworthy that the processing fee of home loans is paid after the application is approved. This is a service charge, also known as an “administrative fee”, hence GST of 18% is levied over the final amount.

Home Loans with Zero Processing Fee

As you would have noticed, in the table provided above, most banks charge an average range of 0.25%-1%. But this can be a substantial amount since it is the percentage of the entire approved loan. There are several lenders who, from time to time, offer discounts and, in some cases, provide zero processing fee home loans. These offers or waivers can be checked with your loan advisor before you confirm your loan application. If applicable, this can save a pretty decent amount.

Different Types of Fees & Charges on Home Loans

A home loan is usually the largest loan one takes in their lifetime. Naturally, when large amounts and long repayment duration are concerned, there are a lot of associated administrative activities, verifications and checks involved. Many of these activities involve a fee or a service charge for them. Before securing your home loan, you must be mindful of the important charges (other than the home loan processing fee) so that you can calculate your finances properly and be clear about what you would finally need to pay.

Home Loan Related Fees

  • Login Fee: One time non-refundable amount charged during the time of the application. Upon approval, this amount is deducted from the processing charges for the home loan, and you need to pay the remainder.

  • Collection / Recovery Charge: Levied in cases of defaulting on repayment, when the lender needs to take legal action. The charge is usually based on actuals incurred plus some percentage penalty over it.

  • Late Payment Fee: It is extremely important to pay your EMIs on time, and the failure to do so can result in late payment charges. Most banks charge somewhere between 2% to 3% of the amount.

  • Prepayment Charge: Lately, it has become common for banks to not charge any amount in case you decide to pay off your home loan in full before the end of the tenure. However, it is important to check with your lender, before you apply for a loan, if they levy any Prepayment or Foreclosure charge.

  • Partial Prepayment Charge: The concept of this charge is similar to the one described above, but in this case it is applicable when the prepayment is being made as a part of the balance amount and not in full. This is also known as Part-payment Charge or Part Prepayment Fee. Be clear whether your chosen lender charges this fee or not because you may make multiple part-repayments in order to close your loan sooner, however you may end up paying an extra amount due to the fees charged.

  • Other Charges: Apart from the above listed, there can be additional charges like Insurance Premiums (in case you buy an insurance to secure the loan and/or the property), Switching Fee (in case you choose to convert your home loan type in-between the active tenure), Repayment Mode Change Fee and a few others.

Home Loan Fees and Charges for Documents

Apart from the procedural charges, as mentioned above, you can expect a host of documentation related fees and charges, such as:

  • Stamping Charge: For the stamping of legal documents and charges on actuals.

  • Income Tax Certificate Charge, Interest Certificate Charge, CIBIL report, NOC, No Dues Certificate, Duplicate copies: Most banks offer these for free, but it is worth checking if your chosen lender levies any charges for these and what the break-up of the charges is.

  • Document Retrieval charges: When you finally pay off your loan, you will require all the original papers and titles returned to you. This, too, requires additional payment which is known as the Document Retrieval charges.

  • Agreement Copy Fee, Duplicate Statements Fee, Amortisation Schedule Issuance Fee: All these kinds of documentation related clerical activities may involve some amount to be paid for availing the service. Many lenders waive off these charges for select customers, or for kinds of loan take, hence you can ask for the same as well.

Legal/Government Charges for Home Loan

  • Legal Fees: A home loan is a contract between you and the bank with several important terms and conditions. All these need to be carefully articulated in a home loan agreement. The amount incurred in creating these legal documents is borne by the applicant. Usually, these charges are based on actuals.

  • Verification Fee: Before sanctioning your loan, the bank will conduct a detailed inspection of the property for which you are seeking the loan. After all, banks work on minimal risk exposure and need to ensure all related attributes are in order. To conduct this verification and valuation, third party services may be utilized, for which the applicant needs to bear the expenses.

  • Other Legal Charges: These include the creation of a Memorandum of Deposit of Title Deed (MoD). This acts as a proof of your property’s ownership that is provided to the bank as collateral in lieu of the loan. The charges vary as per the state where the property is located. There is also something known as a CERSAI Charge and is used to confirm that people don’t abuse the loan facility by taking up multiple loans for the same property. This is a governmental requirement and includes charges for its drafting and submission.

Home Loan Processing Fees FAQs

  • ✔️Is home loan processing fee refundable?

    Home loan processing fee is a non-refundable charge. You can also explore the option of zero processing fee home loans or ask for pressing fee waivers, if applicable.

  • ✔️When do I have to pay the processing fee on home loans?

    Most lenders charge processing fees of home loans after the loan is approved. So, do check with your lender what their process is.

  • ✔️ What are the GST charges on the processing fee?

    Since processing charges of home loans are a service charge, 18% GST is levied on them.

  • ✔️Will I get a refund on my processing fees if my home loan application is rejected?

    This depends on the lender’s policies and should be confirmed beforehand. Some lenders do not return the processing fee, while most may offer partial refunds after deduction of their incurred expenses.