Understanding the charges on your loan against property

A loan against property is now a popular credit instrument because it is easy to use and can serve as a useful source of financing. But in order to plan and manage your finances efficiently, you must understand the charges applicable on your loan against property. This will give you a clear picture of the total cost of taking the loan and help you budget for repayment.
Take a look at the various applicable charges on your mortgage loan.

Loan against property interest rate

The interest rate is the cost at which the lender extends credit to you. It is calculated on the total amount you borrow for the tenor for which you are taking the loan. Interest rates are calculated annually and then added proportionately to each EMI.

Processing fees

Processing fees, also known as application fees, cover administration costs, carrying out credit checks and property appraisals, etc. This amount is deducted from the total loan amount before it is disbursed to you.

Additional Read: Bajaj Finserv Loan Against Property process

Statement charges

Most lenders charge you for interest and principal statements, as well as loan statements that help you monitor the progress of your loan. These are sent to you in the form of a hard copy, and statement charges cover the cost of printing and sending them across to you.

Most lenders charge you for interest and principal statements, as well as loan statements that help you monitor the progress of your loan. These are sent to you in the form of a hard copy. However, the lender will levy a charge for printing and sending the statement to you.
You can avoid this charge by switching to online loan management, which most loan providers offer. One such lender is Bajaj Finserv, which offers online loan management to you for its Loan Against Property. Moreover, you can sign into a secure Bajaj My Account customer portal using a customer ID and password and access all related loan statements at your convenience.

EMI bounce charges

You will incur an EMI bounce charge if you make EMI payments by cheque and the cheque bounces due to insufficient funds. This means you will have to pay an additional amount of around Rs. 500 to Rs. 10,000 per bounce, along with the EMI for that particular month.

Penal interest

If you fail to make EMI payments or default on loan, you will have to pay penal interest. This is charged over and above the rate of interest and is calculated monthly. So, it is best that you plan for repayment in advance to avoid paying such charges.

Additional Read: What is the difference between home loan and loan against property

Part prepayment charges

If you have excess funds, you can make part prepayments towards the principal to repay the loan quicker. As this affects the lender, the institution may levy a prepayment charge. Ensure that you pick a lender with low or nil prepayment charges to make the most of this facility. With Bajaj Finserv, you can make part-prepayments at up to 4.72% (inclusive of applicable taxes) of the principal amount of loan prepaid on the date of such part-prepayment. part-prepayments charges are not applicable for Flexi Term Loan (Flexi Dropline) and Hybrid Flexi. In case of full prepayment (foreclosure) following charges are applicable -

(i) Term Loan: Up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount as on the date of full prepayment.
(ii) Flexi Term Loan (Flexi Dropline): Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.
(iii) Flexi Hybrid Loan: Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.

Note: If all borrowers and co-borrowers are individuals, loan availed on floating interest rates, and loan taken for purposes other than business use, then there will be no foreclosure/ part payment charges.

Foreclosure charges

Foreclosure involves paying off the entire loan in one payment before the lapse of the tenor. But, like prepayment, foreclosing your loan attracts a charge too. So, ensure that the loan you choose has a low foreclosure charge if at all, to make repayment simpler. When you take this loan from Bajaj Finserv and choosing for full prepayment (foreclosure), the following charges are applicable -

(i) Term Loan: Up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount as on the date of full prepayment.
(ii) Flexi Term Loan (Flexi Dropline): Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.
(iii) Flexi Hybrid Loan: Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.

Note: If all borrowers and co-borrowers are individuals, loan availed on floating interest rates, and loan taken for purposes other than business use, then there will be no foreclosure/ part payment charges.

Secure fee

Lenders charge a security fee to reinforce security for your account, transactions, and sensitive information in whatever manner they deem necessary. This involves protecting your online account and keeping all your data safe.
So, when picking a loan against property, don’t pick one just by looking at a low-interest rate. Instead, use the Loan against property EMI calculator to identify the installment you are likely to pay and review the charges before you take a decision.

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