Top News

Buying a home is everyone's biggest dream. When taking out a home loan, our focus is often on just two things: the interest rate and the EMI. In reality, we think that simply paying the monthly installment is all we need to make the decision. But wait! Did you know that hidden in the fine print of the loan agreement are some expenses that could cost you lakhs? Yes, banks often don't disclose these hidden charges. If you ignore them, you could end up paying an extra 5 to 7 lakh rupees on the loan. So, without further delay, let's learn about those 8 hidden expenses that can hit you hard.

1. Processing Fee: The First Shock
The bank charges this fee to approve the loan. In fact, it usually ranges from 0.50% to 1% of the loan amount. So, if you're taking a loan of ₹50 lakh, that's ₹25,000 to ₹50,000.

Tip: Many banks waive this during the festive season; be sure to negotiate.

2. Conversion Fee
This is for existing customers with loans at higher interest rates. If you want to reduce your interest rate and switch to a new rate, the bank will charge you a conversion fee on the remaining amount, which can run into the thousands.

3. Legal and Technical Fees
The bank also determines whether the documents for the property it is granting the loan are in order. It sends lawyers and technical experts to do this. Interestingly, the bank also collects the cost of this from your own pocket.

4. MODT Charge
The MODT charge is a fee paid to indicate that you have mortgaged your home's documents to the bank. Essentially, it's an undertaking to the state government. This charge can range from 0.1% to 0.2% of the loan amount.

5. Franking Fee
Stamp duty is levied not only on the home's registration, but also on the loan agreement between you and the bank. This is called the franking charge. You should know that this can be quite expensive in some states.

6. Home Loan Insurance: The Biggest 'Hidden' Expense
Bank agents often scare you by saying, "Sir, it's mandatory to take insurance with the loan." This premium can range from ₹1 lakh to ₹3-4 lakh, and it's added to your loan amount.

Truth: According to the RBI, taking insurance with a home loan is not mandatory, so you can get cheaper term insurance from outside.

7. CERSAI Charges
This is a central registry that keeps records of which bank has given loans on which property to prevent fraud. Although the amount is small (₹50 to ₹500), it still comes out of your pocket.

8. Document Retrieval Charges
Surprising, isn't it? When you repay the entire loan and go to ask for your home's original documents, some banks/NBFCs even demand money for locating and returning them. Yes.

Conclusion: Wisdom is the best defense
So, it's clear that we should be aware that a home loan is a long-term responsibility. Before signing, be sure to ask for a fee chart (Schedule of Charges) at the bank. If you know these 8 expenses in advance, you'll be able to negotiate with the bank and save lakhs of rupees of your hard-earned money. (Note: This news is based on general information; contact the bank for more details.)

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.