Processing Fees and Charges for Home Loan in 2025
The home loan processing fee is the charge borne by you, the borrower, towards the lender once your home loan application has been accepted. The processing charges for home loans occur only once. Make sure to calculate the cost of your home loan by taking the processing fees into consideration. Compare lenders and choose a home loan with the lowest processing fee.
While some lenders charge a processing fee for home loans, some do not. Usually, the processing fees start with 0.5% of the loan amount and goes Up to 7% in some cases. Bajaj Finserv offers competitive home loan interest rates along with low processing fees. When it comes to home loan interest rates, you should always compare and work out your monthly repayment using a housing loan EMI calculator.
Fee Type |
Applicable Charges |
Processing Fees |
Up to 4% of the loan amount plus applicable Goods and Services Tax (GST). |
Rate of Interest |
|
Bounce Charges |
|
Documentation Charges |
Specific charges are not detailed in the available information. It's advisable to consult directly with Bajaj Finserv for precise figures. |
Prepayment/Foreclosure Charges |
Details regarding charges for early repayment or full foreclosure of the loan are not specified in the provided sources. For accurate information, please refer to your loan agreement or contact Bajaj Finserv directly. |
Goods and Services Tax (GST) |
An 18% GST is applicable on most fees and charges associated with the home loan. |
Types of other home loan charges and fees
Apart from processing fees, lenders levy other charges too. They include the following.
Home Renovation Loan
A Home Renovation Loan is specifically designed to upgrade or repair your home, covering expenses related to redecorating, remodeling, or structural improvements. The processing fee for this type of loan ranges from 0.25% to 2.00% of the loan amount. One of the biggest advantages of this loan is that no prepayment charges are levied, allowing borrowers to repay the loan early without additional costs.
Home Loan Balance Transfer
The Home Loan Balance Transfer facility enables borrowers to transfer their existing home loan to another lender offering better interest rates and repayment terms. The processing charges for this service typically range from 0.50% to 4.00% of the outstanding principal amount. This option is beneficial for those seeking to reduce their EMI burden and avail of competitive interest rates.
Home Construction Loan
A Home Construction Loan provides financial assistance to borrowers looking to construct their own homes. The processing fee for this type of loan can go up to 2% of the loan amount. If the borrower opts for a floating interest rate, no prepayment charges apply. However, for fixed interest rate loans, prepayment terms depend on the lender’s policies.
Before selecting a home loan, it is advisable to compare these charges across different lenders and choose the most cost-effective option that suits your financial goals.
Fees on account of external opinion
Lenders conduct a technical and legal assessment of the property while processing a home loan application. The lending institution charges a flat fee in this case, which the borrower is required to pay. These fees are directly payable to the advocate or technical valuer based on the nature of assistance.
Such fees may vary based on account of external opinion and are usually higher for high-value properties. This process serves two purposes:
- Through a technical assessment, the lending institution understands if the property is worth the value the borrower is seeking
- Legal assessment allows lenders to know if the property is free from any encumbrance or legal complications
Property insurance
Opting for a home insurance cover is crucial for every borrower taking a housing loan. Usually, the cost of insurance varies between 0.1-2% of the value of a property. Here’s an example: Say a borrower has opted for a home loan to purchase a property worth Rs. 40 lakh and the rate of premium is 0.1% - then a premium of Rs. 4,000 needs to be paid.
Property insurance premiums can be paid as a lump-sum amount when the loan application is approved. It can also be paid in the form of yearly payments. Usually, lending institutions offer the ease of one-time property insurance, with the premium included as a part of the loan amount.
Charges on account of delayed payments
Lending institutions require borrowers to pay an additional charge if they fail to pay the EMI as per the repayment schedule. This delayed payment charge is usually levied on the overdue loan amount.
Delayed payment charges for home loans can be as high as 24% per annum of the outstanding loan amount and is charged every time the home loan EMI payment is missed. Although the charges due to delayed payment may seem insignificant compared to the home loan quantum, there is a downside to this scenario. All delayed payments and resulting late payment charges are reported to the credit bureau. Thus, it can adversely affect your CIBIL score, thereby making it harder to avail of credit in future.
Incidental charges
Lending institutions require borrowers to pay an additional charge that acts as a cover in case of any default. These incidental charges include all expenses that arise during the process of recovering dues from the defaulting borrower. Often called recovery charges or collection charges, this is levied by the lender if a borrower fails to pay the EMI and their loan account goes into default. In such cases, the lender may have to take action against the concerned individual. Incidental charges are supposed to cover this and depend on the actual expense of the process.
Statutory or regulatory charges
Financial institutions extending housing loan products require borrowers to bear the cost of certain statutory and regulatory fees. All applicable home loan charges on the following are to be borne by the borrower.
- Stamp Duty Charges
Stamp Duty is the tax payable on property documents and is applied during the sale or purchase of a property. It is a mandatory financial component of real estate transactions, including property purchases, lease agreements, and mortgage deeds and you can use our stamp duty calculator to calculate charges and fees.
- MOD
Maintenance on Demand or MOD is a kind of charge a borrower pays to confirm the property as loan collateral. MOD charges generally account for 0.1% to 0.5% of the loan amount.
- MOE
Memorandum of Entry is where one enters into a declaration with the bank that one has handed over the original set of documents of their property for mortgaging the same as a loan security.
Foreclosure charges
Home Loan Foreclosure is a process that allows borrowers to repay their home loans in full before the scheduled loan tenure ends. However, when considering foreclosure, it is necessary to understand the associated foreclosure charges and implications. When you choose Bajaj Finance Home Loan, you will not have to pay any foreclosure charges if you choose to foreclose your loan.
Part-prepayment charges
Part-prepayment is the process of making a payment towards the principal amount of a loan that is higher than the regularly scheduled installment. This additional payment can help borrowers reduce the outstanding loan balance and, in turn, the interest paid over the loan tenure. With Bajaj Finance you do not have to pay any part-prepayment charges on your loan.
Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) charges: CERSAI charges are fixed, ranging from Rs. 50 for a loan up to Rs. 5 lakh to Rs. 100 for loans above Rs. 5 lakh.
Charges applicable on account of any other statutory or regulatory body along with the applicable taxes must be paid (or refunded, depending on the case at hand) only by the borrower.
Home Loan Processing Fee FAQs
Home loan processing fees are not refundable. These are one-time payments and are a part of the loan application process. The home loan processing fee, however, is not fixed. It varies and depends on several factors, such as the type and amount of loan, and creditworthiness as well as the past repayment behavior of the borrower.
Your processing fee is calculated as a percentage of the total amount. The processing fees may also differ based on your employment type.
Lending institutions usually require borrowers to pay incidental charges to cover the recovery expenses in case they fail to pay EMIs on time. Under such circumstances, the borrower’s account may go into default, prompting the lender to take action and recover the outstanding loan amount. Incidental charges cover the actual expenses borne during this recovery process.
MOD (Margin Over Base Rate) charges are a component of the interest rate on home loans in India. The base rate is the minimum interest rate set by the Reserve Bank of India (RBI), below which banks cannot lend. The margin is the additional interest rate charged by the bank on top of the base rate to cover its costs and make a profit.
MOD charges are applicable to floating-rate home loans in India. The interest rate on these loans is linked to the bank's base rate, which is subject to change based on various factors such as inflation, economic conditions, and RBI's monetary policy. When the base rate changes, the interest rate on the home loan also changes, and the borrower's EMI is adjusted accordingly.
It is important to note that MOD charges are not a one-time fee but a recurring charge that can increase the overall cost of the home loan. The frequency and amount of MOD charges may vary from bank to bank and depend on the borrower's creditworthiness, loan amount, and loan tenure.
The processing fee for a home loan typically ranges up to 4% of the loan amount, depending on the lender. This fee covers the administrative costs associated with processing the loan application, including verification and documentation.
Yes, the housing loan processing fee can often be negotiated. Lenders may reduce or waive the fee for borrowers with strong credit scores, stable incomes, or during promotional offers. It's always a good idea to discuss this with your lender to explore possible reductions.
Yes, the processing fee for a housing loan is typically a one-time payment. It is charged by the lender to cover administrative expenses associated with loan approval and disbursement. This fee is non-refundable, even if the loan application is rejected.
No, the housing loan processing fee is not usually included in the loan amount. It is a separate upfront cost paid by the borrower during the loan application process. However, some lenders may allow this fee to be deducted from the disbursed loan amount.
Yes, some lenders offer home loans with zero processing fees as a promotional offer. However, these may be available for a limited period or for specific customer profiles.
The processing fee for Bajaj Finserv home loans can be up to 4% of the loan amount, plus applicable GST.
Foreclosure charges vary by lender and loan type. For floating rate home loans, no foreclosure charges apply. However, fixed-rate loans may have foreclosure fees depending on the lender’s terms.
Prepayment charges are the fees imposed when a borrower repays the loan before the tenure ends. For floating-rate home loans, there are no prepayment charges, while fixed-rate loans may have charges as per the lender’s policy.
The processing fee is usually paid at the time of loan application submission. It is a one-time charge and is non-refundable.
Apart from processing fees, home loans may have other charges such as legal fees, valuation charges, foreclosure fees, and prepayment charges. These vary based on the lender's policy.
The Goods and Services Tax (GST) applicable on home loan processing fees is 18%.
Yes, in some states, registration of an equitable mortgage is mandatory for legal validation.
An equitable mortgage is a type of mortgage where the borrower provides the lender with property documents as security without a formal registration.
The validity of an equitable mortgage remains until the loan is fully repaid and the property documents are released.
The borrower submits the original property documents to the lender as collateral. The mortgage is created through an agreement between the borrower and lender, without requiring formal registration in some cases.
