Jun 15, 2023Home Ally

Mortgage Processing Fees and Other Charges in India: What to Expect

by Godrej Properties Limited

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Introduction to all the mortgage charges

Mortgage Processing Fees

1. Processing Fee: Lenders typically charge a processing fee to cover the administrative costs of evaluating and processing your mortgage application. This fee is non-refundable and is usually a percentage of the loan amount or a fixed amount. It's important to inquire about the processing fee upfront and factor it into your budget.

2. Legal and Documentation Charges: Lenders may also impose legal and documentation charges to cover the costs associated with verifying property documents, conducting legal checks, and drafting the loan agreement. These charges ensure compliance with legal requirements and protect the interests of both the lender and the borrower.

Other Charges

1. Appraisal Fee: An appraisal fee is charged to assess the value of the property being mortgaged. Lenders hire professional appraisers to determine the fair market value of the property. The appraisal fee may vary depending on the property's location and size.

2. Valuation Charges: Valuation charges cover the cost of evaluating the property's condition and marketability. These charges are often applicable to resale properties or properties in specific locations.

3. Stamp Duty and Registration Charges: Stamp duty and registration charges are levied by the state government on property transactions. These charges vary from state to state and are based on the property's value or the transaction amount. It's important to understand the stamp duty and registration charges applicable in your specific location.

4. Prepayment or Foreclosure Charges: Some lenders may impose prepayment or foreclosure charges if you decide to repay the loan before the agreed-upon tenure. These charges are meant to compensate the lender for the interest income they would have earned if the loan had continued for the entire tenure. It's advisable to review the prepayment or foreclosure charges before finalising a mortgage.

5. Late Payment Charges: Late payment charges are applicable if you fail to make your mortgage payments on time. These charges are imposed as a penalty and can vary from lender to lender. It's important to be aware of the late payment charges to avoid any financial difficulties.

Conclusion

When applying for a mortgage in India, it's crucial to be aware of the various fees and charges associated with the process. Mortgage processing fees, legal and documentation charges, appraisal fees, stamp duty and registration charges, prepayment or foreclosure charges, and late payment charges are some common charges you may encounter. Understanding these charges helps you estimate the total cost of your mortgage and make informed financial decisions. It's advisable to compare the fees and charges offered by different lenders to find the most competitive option for your specific requirements. 
 

Frequently Asked Questions

1. What is an appraisal fee? 

Ans: appraisal fee is charged to assess the value of the property being mortgaged. 

​2. How are stamp duty and registration charges calculated? 

Ans: Stamp duty and registration charges vary from state to state in India and are based on the property's value or the transaction amount.

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