The major advantage that banks take over people is their complicated policies in home loans. Most people will not completely understand their terms and conditions as every bank writes them with complicated terms. Especially, when it comes to countries like India, most people turn a blind eye towards the hidden charges in their home loans.
As there are no regulatory bodies to make this right, transparency will take a back seat when it comes to loans. Home loans are one of the most availed loans in the country and most people will turn up to a reputed real estate developer when it comes to owning their dream house. We strongly recommend you to approach a reliable service provider as most of them will have a direct connection with banks, which can make things easier for you.
Until now, there are no guidelines when it comes to hidden charges in home loans. The transparency level and jargon keep fluctuating between the banks. Here are some of the common tactics used by banks to add hidden charges to your home loan.
Conversion fees:
One of the most common hidden charges in home loans is the conversion fee. To put it in simpler words, it is the overall amount one needs to pay in order to reduce the rate of interest. Most people fall for this offer because they assume that it will reduce the overall interest rate and they will be able to clear off their pending loans faster.
But the reality is that they will still be paying at the same ROI as the remaining amount will be collected in the form of a conversion fee. If you are still confused about the concept of hidden charges in the form of a conversion fee, approach the best property developers in Chennai to get a clear picture of it.
MODT charges:
MODT charges or otherwise known as Memorandum of Deposit of Title Deed is an undertaking by the borrower. Typically, every bank will demand property documents or any form of leverage as a security for the loan. Most people will get their family or friends to sign the document and produce their ancestral property as leverage.
In order to complete the process, the borrower must register it on a govt levy stamp to make it legal. If you are planning on availing home loans from banks to get your dream house, buy the stamp papers yourself. Most banks will impose extra charges on buying the papers and you can easily avoid them.
Document retrieval charges:
Document retrieval charges will be levied at the time of loan closure. To break it down, it is nothing but basically the cost of transferring the original documents that have been submitted by the borrower at the time of availing his/her loan. The transfer will take place from the central document repository to the borrower and typically they will be divided into parts.
- Important documents such as Agreements, deeds, etc.
- NOC forms.
In most cases, the general documents will be kept at the loan location. However, the general documents will be transferred to a city where the central repository of a bank is located. The documents will be kept safe and will be transferred to the respective branches at the time of closure. The transfer charges for the courier service provider will be added to the processing fee. As a borrower, one must know all these steps before approaching flat builders in Chennai to own their dream house.
Administrative charges:
Most people confuse administrative changes with processing fees. Typically, banks charge administrative charges separately and your real estate developer will guide you through this process. Administrative charges should also not be confused with front end cost, as the charges are actually levied for back-end processing of your loan application. Most banks advertise “processing fees will be completely waived off” as a gimmick, but they will add it up in the administrative charges.
Legal assessment fee:
As you approach a bank for a home loan, they will employ a third party to deal with the legal and technical part of the property. The bank will process your home loan only if the third party shows a green signal. Often charges are higher when it comes to higher-value properties as it involves multiple rounds of the technical and legal assessment. You can also suggest your real estate developer before proceeding to get a basic idea of the legal assessment fee for the property.
Late payment fees:
Late payment is not a new concept to Indians as people belonging to the economically weaker section will take heavy loans to build their dream house. They might fail to pay the loan amount on time at some point in the tenure and the banks will charge late payment fees in order to compensate for it. It is wise to take the advice of your real estate developer and choose the ideal bank that suits your requirements properly.
Conclusion:
The aforementioned hidden charges are few significant ones. The list will go on and to be transparent, almost every home loan offered in India has hidden charges in it. Sometimes they are clubbed under a fancy as a gimmick.
