A Closer Look at the Various Loan Against Property Fees and Charges

A Loan Against Property (LAP), also known as a property loan or a mortgage loan, is a type of secured loan that can be availed by borrowers against a residential or commercial property that they own. The sanctioned loan amount is extended based on several factors, such as your age, income, and market value of the collateral. The loan amount can be utilised for a wide range of housing and business purposes like home renovation, business expansion, or even debt consolidation.

Like other kinds of credit, property loan borrowers are obligated to cover certain fees and expenses towards loan processing, property verification and other associated charges. These costs are relatively minimal and aid the loan process making it hassle-free for the borrower. 

A Closer Look at the Various Loan Against Property Fees and Charges

Before applying for a property loan, aspiring borrowers need to plan for the entire loan by assessing the actual credit cost and monthly payouts till the end of the tenure. This can be easily achieved by using helpful online tools like a Loan Against Property EMI Calculator. However, they also need to be aware of all the additional charges pertaining to a mortgage loan; some of which may be fixed while some may vary depending on the loan amount. The usual list of these charges commonly includes: 

Loan Against Property Processing Fee

All lenders impose a fee for processing loan applications. This one-time charge is levied when individuals submit their application forms. 

Legal Charges

Lenders evaluate all the documents required for a Loan Against Property before granting approval. This is done to appraise the credit risk of an applicant’s profile through legal paperwork and property verification, better known as legal fees. 

People Also Read: What is the Minimum CIBIL Score Required for a Loan Against Property?  

EMI Bounce Charges

If you pay your loan EMIs by cheque and it so happens that a cheque is not honoured due to insufficient funds in your account, issues with auto-debit instructions or post-dated cheques; you will be fined a specific amount as EMI bounce charges.  

Penal Charges

When one fails to make timely repayments on their loans within the grace period, lenders exact a penalty. This fee may differ with every lender.  

Remember, among all the charges specified here, EMI bounce charges and penal charges can be avoided if you plan your EMI outgo well in advance so as not to miss any payment. Nonetheless, there are some additional Loan Against Property charges like part prepayment charges and foreclosure charges that should be factored in if you wish to close the loan earlier before the end of your tenure.  

People Also Read: Easy Ways to Pick the Right Loan Against Property Tenor 

Part-Prepayment Charges

A part-prepayment fee is imposed by lenders if you decide to pay off a small portion of your outstanding loan. 

Foreclosure Charges

Similar to a prepayment, foreclosing your loan also incurs a fee wherein one repays their loan balance with a single payment rather than multiple EMIs. In such cases, ensure that your loan has a modest foreclosure charge to ease the payouts. 

Apart from the charges mentioned above, lenders may also levy other fares for non-compliance and for issuing duplicate NOCs. The list provided here is not a comprehensive one and the charges may vary among lenders. Hence, it is advisable to discuss and confirm the applicable charges beforehand to eliminate any confusion at a later stage. 

To Sum Up 

Understanding the fees associated with Loans Against Property is as important as being informed about specific loan details such as eligibility criteria, documentation requirements, and other pertinent information. While computing the finances involved in availing a property loan, one needs to account for all these extra costs as they might lead to a substantial increase in the overall price of your loan.  

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