Home loan processing fees: An essential guide

Financing your home purchases requires considerable capital and home loans are the most suitable option for purchasing your dream home. Several banks offer home loans to help you buy or construct a home to your requirements and charge interest rates on the financed amount. However, the interest rate on the loan is not the only charges that you pay. Your financer includes a home loan processing fee as a one-time charge during the application.

Depending on the bank, the home loan processing fee may vary slightly hence, you need to consider it an important factor when choosing a bank for a home loan. A few banks also provide zero processing fee home loans as a promotional offer to make them affordable.

What is a home loan processing fee?
 

A home loan processing fee is a one-time charge usually paid upfront when you apply for a home loan. Some banks also refer it to as an administrative fee and the home loan processing fee can range from 0.25% to up to 3% of the principal loan amount depending on your bank.

In most cases, you need to pay the processing fee upfront from your pocket. However, several banks also manage them in your total loan cost, and you can pay them with your monthly instalments.

As a promotional offer, banks can also introduce zero processing fee home loans for a specific period. You can save a considerable amount on your home loans when opting for zero processing fees. With shallow online research, you can find banks offering low or zero processing and choose the most 

IDFC FIRST Bank home loans offer attractive discounts on home loan processing fees. Moreover, you can acquire a loan amount of up to ₹5 crores through a completely digitised process and minimal documentation for an extended tenure of 30 years.

Current home loan processing fees
 

As mentioned already, the home loan processing fees can vary depending on the bank you apply to. The processing fee for a home loan can mostly range between 0.25% to 3% of the principal loan amount. Unlike other charges, you need to pay a home loan processing fee upfront during application.

By researching online, you can find the most affordable home loan processing fee and choose a loan amount that suits your financing needs. Moreover, to know various charges and fees and your home loan eligibility, you can use a home loan calculator tool. You simply need to enter the amount you require to purchase a house, the interest rate offered, and the tenure for which you require a loan.

The home loan EMI calculator will then display a precise amount that you need to pay every month along with the total interest and loan cost. You can plan your home financing accurately using a home loan EMI calculator.

Since home loans are secured loans requiring you to pledge collateral, banks do not charge a very high interest rate. However, there are a few charges that banks levy while lending home loans which you need to consider while calculating how much the loan is going to cost you. When looking for a home loan, it is important to go through the fee and charges, especially the interest rates and home loan processing fees as these are the most significant charges. Getting a good deal on home loan processing fees and low-interest rates on home loans can make your home financing much more affordable.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.