When comparing home loans from different lenders, most prospective borrowers restrict their comparison criterion to home loan interest rates. However, applicants have to incur various charges and fees during the loan application process as well as during the loan repayment 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 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 |
|
| HDFC |
|
| Axis Bank | Up to 1% (Minimum Rs 10,000) |
| ICICI Bank | Up to 2% |
| Kotak Mahindra Bank | Up to 1% (50% off on processing fees for digital applications) |
| PNB Housing Finance | Up to 1% |
| Punjab National Bank | NIL up to 31st March 2025 |
| Bank of Baroda | 0.25%-0.50% of loan amount (Rs 8,500-Rs 25,000) |
| Union Bank of India | Waived off |
| IDFC First Bank | Up to 3% |
| L&T Housing Finance | Up to 3% |
| Godrej Housing Finance | Up to 3% |
| Tata Capital | Up to 2% |
| LIC Housing Finance | 0.25% (Minimum Rs 5,000 to Maximum Rs 50,000) |
Rates are updated as of 15 October 2024
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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 fees during festive season offers or other occasions. For instance, the processing fee of a PNB Home Loan is NIL till 31 March 2025.
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 loan, lenders can levy a prepayment penalty, during the fixed interest rate period. Once the loan starts accruing a floating rate, the banks & HFCs cannot levy the prepayment penalty.
Foreclosure Charges
This charge is levied as a penalty if 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.
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 Home Loan, the option for switching loans from fixed to floating rate is allowed on payment of 0.50% 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 those whose administrative charges are fixed or have an upper cap on them.
Also Check: Home Loan EMI Calculator