Home loans are one of the most availed loans worldwide. But most people aren’t aware of the hidden charges that are built into the total amount sanctioned. These hidden charges will not have any proper guidelines and aren’t regulated. It will differ from bank to bank and there won’t be any transparency in these charges.  

Since most people will be in a desperate situation to buy their dream house, they will ignore these charges. In reality, taking up a loan is one of the biggest commitments in life. In order to stay on the safer side, one must have a clear understanding of the hidden charges in a home loan. 

Here is a quick guide on the various types of hidden charges in home loans that can help you while approaching flat promoters in Chennai.

MOTD charges:

MOTD charges are also known as the Memorandum of Deposit of Title Deed. It is nothing but the applicant stating that the property has been pledged to the bank. It will require a stamp and the charges will vary from one state to another. 

Conversion fees:

In most cases, home loans are offered at a floating rate of interest. In some cases, the base rate will reduce over a period of time and it will provide a window for the customers to alter their rate of interest. However, they will be charged a conversion fee every time they opt to change the rate of interest. 

Legal fees:

Banks hire legal experts to deal with all sorts of document validations. The changes may differ based on the valuation of the property For example, the charges for flats in Ayanambakkam will differ from other neighborhoods due to the valuation of the land. 

Administrative charges:

Typically, Administrative charges are not included with the processing fees as it depends on the bank you choose. Although the processing fees will be waived off some banks will charge the administrative fee. 

Prepayment charges:

Banks also provide the option to clear the home loan prior to the end of tenure. However, in order to avoid the prepayments, they will charge prepayment charges. The charges will differ with banks and they are collected in order to make up for the losses incurred by the bank as the customer finishes off the loan before the period. 

Late payment charges:

Home loans include a huge sum of money as the late payment charges. Just like every other loan, the customer has to pay a penalty in case of late payments. The banks will also have a fixed penalty rate and it will fluctuate based on the current outstanding loan. 

Conclusion:

Most banks will have the information on their charges in home loans on their websites. Since several people have started hunting for a house for sale in Ayanambakkam and other neighborhoods, the prices keep rising higher. One must have an in-depth understanding of the hidden charges to plan his/her finances accurately.