Buying a home depends on the funds you have available with you. If an individual does not have sufficient funds in hand to buy a home, then he can opt for a home loan to gather funds to fulfil the requirement. Any individual generally avails a home loan for either buying a home or plot of land for the construction of a house, or renovation, extension and repairs to your existing house.
A home loan comes with several other expenses than the loan EMI. You should check your eligibility for a home loan and start the application process. But, before going for the documentation you should glance through the below mentioned charges and fees you will need to pay other than the loan EMI before you get your dream home.
1. Processing Fees: The first and the most common expense, which one has to bear as a part of your Home Loan application is the processing fee. You will be asked to pay the processing fee at the time of submission of your application for your home loan. This fee is non-refundable but it varies from one lender to another. It is charged as a percentage of total home loan amount and usually varies from 0.25% to 1%. If the home loan application gets rejected, then this fee would not be refunded. Processing fee is charged by the lender to process your application, verify your documents and process all the formalities.
2. Legal Advisor Fees: When you decide of buying a home and arrange the funds by availing a home loan, you will be required to get your new house’s documents reviewed by a lawyer. They will check the title of the property along with the documents and records of the past ownership. And you will be required to pay a fee for the services rendered of a legal advisor. In other words, you have to bear this fee to get the property documents verified by a legal advisor.
3. GST Tax on all bank fees: GST is another amount that will be charged by your lender on the amount that you have to pay them as fees.
4. Stamp paper cost: Stamp Duty is a nominal expense that you have to pay for the legal documentation on which the home loan agreement will be made. It will contain a legal home loan agreement between you and your bank. Once your home loan is approved by the bank, only then you have to pay this fee to get the loan agreement. The lender will ask you to pay this fee for the loan agreement as this amount is not included in the processing fees.
5. Cost of Home Insurance Premium: You should insure your home with home insurance if you are availing a home loan to finance the purchase of your new home. Same as the other expenses mentioned above, the cost of home insurance premium has to be taken up by you only. You have to pay the insurance amount upfront post the loan approval and first disbursement by your lender.
6. Home Loan Insurance Premium: Home Loan Insurance insures you against your home loan liability. Home loan insurance is different than the home insurance. Home loan insurance insures you against your home loan liability and home insurance insures your property. The home loan insurance premium amount depends on the loan amount, tenure of your home loan and the insurance provider. Your premium amount will also reduce if your home loan tenure reduces. Home Loan Insurance acts as a guarantor if the lending bank requires a guarantor in your case. If you do not have a guarantor, home loan insurance can act like one for you.
So, before you go for a home loan, remember that it comes with several miscellaneous expenses apart from your loan EMI.
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