|Rs 10,000 to 0.20% of Loan amount
|IDFC First bank
|0.20% of the Loan amount
|Rs 5900 to 0.50% of Loan amount
|Rs 10000 to 0.50% of Loan amount
** Banks keep changing the Processing fee and keeps coming with attractive offers.
Processing Fee for Home Loan
We all have come across the term “Processing Fees” for any type of loan. Processing fee is charged for any type of loan be it Personal Loan, Home Loan, Business Loan, Working Capital Loan or Mortgage Loan.
Let us understand in brief why a Bank charges processing fee in Home loan. When we apply for a Home loan, right from the initial process of Home Loan application to final process of Home Loan Disbursement, there are various costs that a particular Bank incurs for which they charge a fixed Processing fee.
- CIBIL Check– This is the very first requirement for Home Loan application. A good Cibil score ensures a stronger Home loan application. Cibil score for Home loan ranges from -1 to 900. A cibil score of 720+ is considered to be a good score.
- Legal Check of Property– Since a Home loan is usually attached to a property as a collateral, a Bank makes sure that the property is legally competent and dispute free. It undertakes a Search & Title of attached property for last 13years or 30 years and decides if loan is to be given or not. Legal check also checks current LIEN status, proper ownership transfer process etc
Clear Title & Search also ensures that a buyer is making a correct decision of purchasing a dispute free property!
- Valuation of Property- A Physical valuation of the said property is undertaken to decide the loan eligibility and also to check the structural design of the property.
Banks usually fund upto 90% of the Market value or Valuation as per them. It helps the buyer decide the loan amount for Home loan he is eligible for.
Also property with structural changes which do not match with Sanction Plan of property, might create hurdles in Home loan application process
- Income assessment- The Underwriting team at Banks processing centres does an Income assessment for Loan applicant to decide his eligibility. It is not only the Cibil score or Market value of his property but also his EMI Repaying capacity that decides on the Loan eligibility.
There are various other costs that a Bank incurs like address verification of applicants, Visit to the client place for Personal discussion round, mortgage creation charges etc for which they charge the customer a fixed Processing Fee!
So from the above information it is quite clear that whatever process the bank is doing by charging customer a Processing fee also ensures that one is buying a Clear Title and Dispute free property.
It is very much in the interest of the customer that by paying a fixed Processing fee, he is making sure that Legally, Technically and Valuation wise he buying a right property.