Article

Loan Processing Charge
June 07 , 2012

When you apply for a home loan, the Bank or lender carries out two checks:

  • Whether you have sufficient repayment capacity based on your earnings
  • Whether the house you are buying has clean titles is free from possible dispute

The latter is equally important, because the Bank has only the house as a security, should you be unable to repay. The last thing it would want is multiple claimants on the house!

To carry out these two checks, when you apply for a loan, the Bank charges what is called 'processing charge'. This is usually flat, at about Rs 10,000. Sometimes it is also levied as a small proportion of house value. This is levied irrespective of whether you finally take the loan later or not – it is simply to sanction the loan for you. In most cases, this is a relatively insignificant charge – so you may even pay this to two different banks, so that you can negotiate for good rates between them.

 

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