Know Different Types of Home Loan Charges

While every home loan borrower knows about the interest rate, not many know about other charges they must pay. If you plan to take a home loan, read this article to learn more about the different home loan charges. 

Today, most lenders in India allow people to apply for a home loan online. With the help of a home loan, they get the required funds to purchase a house. The loan borrower must repay the loan via EMIs. Apart from the EMIs, there are other charges that the borrowers must pay, but they are unaware of it. As a home loan borrower, you must know the various costs you are liable to pay. This will help you prepare your budget accordingly and understand the actual loan cost. 

Types of Home Loan Charges

  • Loan Processing Fee

The loan processing fee is one of the most common charges levied by the lenders. The lenders charge this fee to provide services such as verifying documents, reviewing the borrower’s application, etc. Furthermore, it is a non-refundable fee. Therefore, every home loan borrower should look for lenders that charge a low processing fee.

  • Property Insurance

Most home loan lenders in India require borrowers to purchase property insurance. Thus, a home loan borrower must pay the premium regularly during the loan tenure.

  • Delayed EMI Payment Charges

If a home loan borrower doesn’t pay his/her EMI, the lenders might levy a delayed EMI payment penalty, which can be a significant amount. Hence, it is paramount that the borrowers don’t delay the EMI payments. Also, delayed payments affect the credit score. 


  • Legal Fees

While most lenders include legal fees in the processing fee, some lenders might charge it separately. Many lenders appoint an agency to verify the borrower’s documents and charge a fee for the services. 

  • Conversion Fee

If a loan borrower wants to transfer the loan to a new lender to take advantage of the lower interest payment, then he/she can do that by paying a conversion fee. The fee depends upon the difference between the old and new interest rates. 

  • Prepayment Charges

Prepayment charges are levied when a borrower wants to repay the loan before the end of the actual tenure. There are no prepayment charges levied on loans borrowed at a floating interest rate. However, home loan borrowers who have taken fixed interest rate loans will have to pay prepayment charges.

  • Other Charges

There are other charges that a lender might levy, such as check dishonour charges, re-appraisal of a loan after six months from sanction, PDC swap, increase/decrease in loan tenure, etc.