Guide to Understanding Home Loan Processing Fee

The demand for housing loans has drastically increased in India. You will be surprised to learn that the Indian housing loan market is predicted to grow with a CAGR of 22% by 2026!

More facilities are now available for people applying for housing loans. Most people do not have enough to purchase a house in India immediately.

However, they prefer to take a loan and fund the property purchase.

Before applying for a housing loan, it is essential to understand the associated charges/fees. One associated charge is the processing fee.

Read on to understand more about the processing fee for a housing loan in India.

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What Is the Processing Fee for A Home Loan?

Are you using an EMI calculator for home loan charges? Has the housing loan agent told you about the processing fee for the housing loan?

The processing fee is an essential housing loan charge paid to the lender. The lender will not disburse the home loan amount to your bank account without receiving the processing fee.

Paying the processing fee is compulsory for a housing loan. You cannot ask the lender to disburse the housing loan amount and pay the processing fee from the received funds. The borrower must pay the processing fee from their pocket to the lender.

Borrowers cannot ask the lender to deduct the processing fee from the loan amount. It is an upfront and one-time payment to receive a housing loan in India.

Some financial institutions might refer to processing fees as administrative fees. Once a borrower’s loan application is approved and documents are verified, the processing fee must be paid.

Lenders can receive processing fees in cash or online payment. The processing fee for housing loans might differ for self-employed and salaried individuals.

Do you know why lenders are bound to charge a home loan processing fee? Financial institutions have to bear some administrative costs for processing, approving, and disbursing housing loans.

The lender will ask for a small processing fee to cover those costs.

The housing loan processing fee is small and can be easily paid by the borrower. It can be between 0.4% to 2% of the housing loan amount.

Note that the fee for a housing loan might differ from one lender to another in India.

PNB Housing Loan Processing Charges

PNB Housing is known to charge low processing fees from home loan applicants. You pay only around 1% of the housing loan amount as the processing fee.

With PNB Housing, you can be sure of a low home loan processing fee. Individuals with high creditworthiness and repayment capacity might get better deals.

Understanding Other Charges for A Housing Loan in India

The processing fee is not the only charge on a housing loan in India. Many other charges are applied by the lender for a housing loan. Loan applicants must be familiar with the charges associated with a housing loan, which are as follows.

Prepayment charges are applied when the borrower tries to pay off the loan before the repayment tenure.
Some lenders might ask for an application/login fee along with the housing loan application.
The lender applies late payment charges when borrowers fail to deposit housing loan EMIs timely.
You will have to pay a conversion fee for converting the interest type of your housing loan (floating to fixed interest or vice-versa)
The lender might apply some charges when the borrower asks to change the repayment tenure after paying a few EMIs
The lender might ask for some charges when the borrower asks to change the date of EMI submission in the middle of the loan tenure.
When the borrower refuses to pay off the housing loan, the lender applies recovery charges and takes the necessary actions to cover loan costs.

Conclusion

One can find an EMI calculator for home loans on PNB Housing’s website. It can help you understand the charges associated with a housing loan in India.

PNB Housing is known for lower processing fees and affordable interest rates on housing loans. So check the processing fee and apply for a home loan today!

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