What Are The Different Fees And Charges On Loans Against The Property?

A loan against property, often termed a mortgage loan or LAP, is a popular loan type available to salaried, self-employed, and self-employed non-professionals. The property against the loan serves as security, and the loan amount is sanctioned based on an assessment of several variables. Obtaining an LAP entails some minimal fees and small expenses for loan processing, property verification, and so on. These fees are relatively minimal, and they assist in making the process easier and less stressful for both the lender and the borrower.

While some charges are fixed, others may vary depending on the amount obtained. Let’s take a closer look at the details of these charges:

1. Legal Charges – The lender checks all property-related paperwork before approving a loan against your property. They also examine the risk in the applicant’s profile using legal papers and property verification. This legal fee might range between Rs 5,000 and Rs 10,000.
2. Loan against property processing fees – The Loan against property processing fee gets charged when the loan is processed. This one-time fee is imposed when the application form is submitted. This charge might range from 0.5% to 2% of your loan amount, plus GST.
3. CIBIL Report charges – CIBIL charges a modest fee since banks review the credit score while evaluating loan applicants.
4. Secure fees—The lender levies this charge on loan against property to enhance security for your account, transactions, and sensitive information or data in whatever way they feel necessary. This charge can be avoided using online loan administration, which most loan providers now provide.
5. Statement fees – The cost of printing and mailing interest and principal statements, as well as loan statements that assist you in tracking your loan, are referred to as statement charges on a mortgage loan.
6. Loan rescheduling fees – Loan rescheduling extends or adds time to your current loan term. It causes a modification in your monthly instalment sum, allowing you to pay less each month. However, doing so imposes this rescheduling fee charged by the lender.
7. EMI bounce charges – If you pay your EMIs by cheque and the cheque fails to owe insufficient funds, you will get charged an EMI bounce charge. However, as a borrower, if the same thing happens during your LAP EMI payment, your lender may charge you a bouncing fee.
8. Penal interest charges – This fee is applied to your mortgage loan if you fail to make timely payments. Typically, the penalty or default fee is 2% per month or 24% per year on the outstanding sum. This charge may differ from one lender to the next.
   Out of these charges, EMI bounce charges and penal interest charges can be avoided if you plan to pay ahead of time and never miss a payment.
   Additional charges, like Part- payment and Foreclosure charges, may be added to your loan against property charges if you opt to pay more toward the loan’s closing before the tenor ends:
9. Part-payment charges—A part-payment or a part pre-payment charge is the fee imposed by the lender if you pay off a portion of your total rather than the entire amount. Floating-rate schemes, once again, are generally immune from this.
10. Foreclosure charges are the cost of repaying the outstanding loan balance in a single payment rather than several EMIs. Like prepayment, foreclosure incurs a fee. Ensure your loan has a low foreclosure charge to make payments easier.

In addition to the fees listed above, the lender may charge you for loan statements, noncompliance, and the issuance of duplicate NOCs.

To sum up

Understanding the various loan against property charges is just as important as understanding the facts, such as the loan against property criteria and the paperwork required. You can make informed decisions by taking into account all these charges. It is wise to thoroughly examine the lender’s website and be aware of these additional charges to make the most of your loan against property.