Many borrowers limit their focus to monthly EMI payments when applying for a Home Loan. However, several hidden expenses can impact your borrowing cost. Being aware of these expenses is crucial for managing your Home Loan expenses more effectively and it helps avoid unexpected financial strain. Here are the key areas to monitor beyond the EMIs:

Processing fees

Most lenders implement a processing fee for handling your Home Loan application. Depending on the lender, these fees can range from a small amount to a significant percentage of the Loan amount. Make sure to account for this upfront cost when budgeting for your Loan.

Registration charges

Besides the Loan amount, you need to pay for legal formalities associated with the property purchase, including stamp duty and registration charges. These costs vary depending on the state or region and are often calculated as a percentage of the property's market value. Ensure to check the specific charges for your location and include them in your budget.

Prepayment charges

Many House Loans come with penalties for early repayment or foreclosure. These expenses differ depending on whether you repay the Loan partially or fully before the agreed-upon tenure. Some lenders do not charge any prepayment charges if the Loan has a floating interest rate. However, if it has a fixed interest rate, you may need to pay 5% to 7% of the amount prepaid.

Documentation fees

Specific lenders may charge for legal checks and the preparation of documents related to the Home Loan agreement. These costs may include title verification, property evaluation, and document notarisation. The fee is anywhere between Rs. 3,000 and Rs. 5000, depending on the Loan amount. Ensure that these expenses are included in your Loan agreement and budget.

Application fee

The application fee is the charge that lenders impose when you apply for a Home Loan. It covers the costs of processing your application, including document verification, credit checks, legal evaluations, and administrative expenses. The application fee can vary depending on the lender, Loan type, and even the Loan amount. It is typically a fixed amount of Rs. 2,500 to Rs. 6,000, depending on the Loan amount.

Duplicate document fees

The duplicate document fee is charged when you request a second copy of any official Loan documents. These may include your Loan agreement, sanction letter, repayment schedule, or any other legal paperwork associated with your Home Loan. This fee helps cover the administrative costs of retrieving and issuing additional copies of documents, which often involve manual processing or special requests. The fee is not more than Rs. 500 per document set.

Conclusion

While the EMI is a major component of your Home Loan, factor in these hidden expenses upfront and monitor them throughout the Loan's life. This helps you make more informed decisions and maintain better control over your long-term financial health.