When comparing home loans from different lenders, most borrowers restrict their comparison criterion to interest rates. However, home loan borrowers have to incur various charges and fees during the loan application process as well as during the loan tenure. For example, lenders charge processing fees, administrative fees, etc during the loan processing stage. Borrowers incur event-based charges like conversion fees, penal rates, pre-payment/foreclosure fees (in case of fixed-rate home loans), etc on availing specific services or failing to meet loan-related commitments. Knowledge of these charges can help the borrowers in managing their home loans better.
Home Loan Processing Fees offered by Top Banks and HFCs in India
| Name of Lender | Processing fee (% of the loan amount) |
|---|---|
| State Bank of India | 50% waiver on basic processing fee [0.35% of loan amount (Rs 2,000-Rs 10,000)] |
| HDFC | For Salaried/Self-employed Professionals: Up to 0.50% of the loan amount or Rs 3,000, whichever is higher For Self-employed Non-Professionals: Up to 1.50% of the loan amount or Rs 4,500, whichever is higher |
| Axis Bank | Up to 1% (Minimum Rs 10,000) (Upfront Rs 10,000) |
| ICICI Bank | 0.50% – 2.00% or Rs. 1,500 (Rs 2,000 for Delhi, Mumbai, & Bangalore), whichever is higher |
| PNB Housing Finance | Up to 0.50% |
| Bank of Baroda | Up to Rs 50 Lacs 0.50% of Loan amount: Minimum: Rs 8,500 (Upfront) Maximum: Rs 15,000Above Rs 50 Lacs 0.25% of the loan amount: Minimum: Rs 8,500 (upfront) Maximum: Rs 25,000 |
| Kotak Mahindra Bank | For Salaried: 0.5%;For Self-employed: 1% (Upfront Rs 5,000) |
| Punjab National Bank | 0.35% (Rs 2,500 – Rs 15,000) |
| LIC Housing Finance | 0.35% of loan amount subject to a maximum of Rs 50,000/- + GST |
| Tata Capital | Up to 0.5% |
| Godrej Housing Finance | Up to 2% |
| Bajaj Housing Finance | Up to 6% |
| L&T Housing Finance | Minimum 0.25% |
| IDFC First Bank | Up to 3% |
| Union Bank of India | 0.50% (Maximum Rs 15,000) |
Important Fees and Charges of Home Loan
Loan Processing Charges
Processing fee refers to the one-time charge levied by lenders on applicants for processing their home loan applications. This fee is generally non-refundable. Depending on the lender, this fee can go up to 3% of the loan amount. Some lenders also waive off processing fee during festive season offers or other occasions.
Foreclosure Charges
This charge is levied as a penalty in case a borrower repays their full loan amount before the end of its term. Some lenders do not allow foreclosure of the loan account until the repayment of a pre-determined number of EMIs. However, RBI regulations have barred banks and Housing Finance Companies from levying foreclosure charges on floating interest rates. Lenders offering home loans at fixed rates are free to decide whether to charge foreclosure fees or not.
Partial Prepayment Charges
This charge is levied as a penalty in case a borrower prepays part of the loan amount. However, floating rate home loans are exempted from prepayment fees, if taken by individuals. In case when individuals opt for dual rate home loans, lenders can levy a prepayment penalty, during the fixed interest rate period. Once the loan starts accruing floating rate, the banks & HFCs cannot levy the prepayment penalty.
Penal charges/ Default interest/Late payment/ Overdue (per month)
Defaulting home loan monthly installments lead to the levy of penal charges on unpaid EMIs. This charge can either be a fixed amount or a pre-determined percentage of the unpaid EMI(s). For instance, IDFC First Bank charges 2% per month of the unpaid EMI or Rs 300 whichever is higher.
Conversion Charges
Banks and NBFCs charge conversion fees on converting their fixed-rate home loan to floating-rate home loan or vice versa or from converting the existing fixed interest rate to a revised one. For instance, in the case of HDFC Ltd, the option for switching loan from fixed to floating rate is allowed on payment of 0.5% of the principal outstanding at the time of conversion or Rs 50,000 plus taxes, whichever is lower.
Administrative Charges
Many lenders charge an administrative fee in addition to their processing fee. This non-refundable fee is charged to cover the expenses incurred during legal verification, examination of documents, and valuation of the property. Borrowers should compare this fee while evaluating their home loan options. Prefer lenders whose administrative charges are fixed or have an upper cap on them.