Know the Types of Housing Loan Charges

Know the Types of Housing Loan Charges - Bajaj Housing Finance

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3 Min 22 Jan 2024

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Home Loan Charges
Types of Home Loan Charges

Home Loan Charges

When considering a Home Loan, the interest rate is only one part of the overall borrowing cost. In addition to the interest payable, certain home loan charges may apply at different stages of the loan journey. Familiarising yourself with these charges can help you better understand the overall cost of borrowing and plan your finances accordingly.

Different Types of Home Loan Fees and Charges

If you are considering a Home Loan, it is helpful to understand the various charges that may be applicable during the loan tenure. Some of the common Home Loan charges include:

Loan Processing Fee

A processing fee is a one-time charge that lenders may collect for evaluating and processing a Home Loan application. The applicable fee is generally linked to the loan amount and may vary depending on the lender's policies.

EMI Bounce Charges

EMI bounce charges may be applicable if a scheduled EMI payment is unsuccessful due to reasons such as insufficient funds or issues with the repayment account.

Late Payment Charges

If an EMI is not paid by the due date, the lender may levy late payment charges in accordance with the loan agreement.
Planning your repayments in advance and using tools such as our Home Loan EMI Calculator can help you estimate your monthly obligations and reduce the likelihood of missed or delayed payments.

Fixed Rate vs. Floating Rate — Impact on Home Loan Prepayments or Foreclosure

Interest is the cost of borrowing a Home Loan and is charged on the outstanding principal amount. With a fixed interest rate, the rate applicable to the Home Loan remains unchanged for a specified period, subject to the terms and conditions agreed upon at the time of loan sanction. This can provide greater predictability in repayment planning, as changes in market interest rates do not immediately affect the loan.

On the other hand, a floating interest rate is linked to an internal or external benchmark and may change over the course of the loan tenure. As benchmark rates move in response to market conditions, the applicable Home Loan interest rate may increase or decrease, which can influence the EMI amount or repayment tenure, depending on the lender's policy.

Note that, individual borrowers with floating interest rate Home Loans face no additional charges if they wish to prepay or foreclose their loan. However, for fixed rate Home Loans, prepayment charges apply if payment is not made from 'Own Sources'.
Note: 'Own Sources' refers to any source other than borrowing from a bank/NBFC/HFC and/or a financial institution.

Read Also: Different Types of Home Loans

Frequently Asked Questions-Home Loan Charges

Frequently Asked Questions

Processing charges may be applicable when you opt for a Home Loan Balance Transfer.

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