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Home loans can be tricky creatures. No doubt they help you achieve your long-standing goal of owning a house. But they cost a lot. And at times, many of the costs are not obvious initially.
Most people focus on factors like EMI, loan tenure and interest rate. But as already mentioned, there are several other hidden charges that can miss the eye of the borrower.
Let’s have a look at these easily missed charges so that you can be better prepared for these in future:
Valuation Fees – This is the cost of physical inspection and valuation of the property. When a loan application is submitted with the lender, they conduct various inspections to understand whether the amount of loan applied for is justified or not. The lenders don’t want to over lend.
Legal Fees – This is similar to valuation fees. At times, lenders just to be sure hire external legal consultants to validate the legal status of the property. This legal cost is to be borne by the loan applicants and at times, is clubbed with the valuation fees only and not charged separately.
These fees are to be paid at the time of taking a new loan. But there are others that are to be borne during the tenure itself:
Conversion Fees – This fee is charged if you want to switch to lower interest rates. If you had borrowed originally at 11% and now the rate is 9%, it makes sense to shift your loan to lower rate and save extra interest. A similar fee is charged if one is shifting from fixed to floating loan type or vice versa.
Loan Tenure Change Fee – as your income increases, you might want to pay more EMI and reduce your loan tenure. This can be done by paying a small fee to the lender for change in loan tenure.
Penal Charges for Late Payment – Any delay in EMI payment and lenders have the option to levy a Late Payment Charges.
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