From Processing Fee to EMI Penalty: 7 Costs Banks Won't Highlight

Home Loan: If you're buying your first home or thinking of transferring a home loan, just looking at the interest rate can cost you lakhs. 7 different hidden charges inside a home loan can make it more expensive. Here's how you can avoid them

1. Processing, Legal, and Government Fees

First-time buyers often miss upfront costs like processing and legal fees. These can be 0.25% to 1% of the loan. Always negotiate, even with 'zero fee' offers.

2. Prepayment and Foreclosure Charges

Early loan repayment isn't always free. Floating-rate loans have no prepayment fee, but fixed-rate loans can have penalties up to 4%. Know your loan type before paying early.

3. Conversion Charges

Switching between fixed and floating rates costs a conversion fee, about 0.25-0.5% of the balance. This can add lakhs to your loan. Calculate if the switch is worth it.

4. Balance Transfer

A balance transfer to a bank with a lower rate isn't free. You'll face new processing, legal, and valuation fees, plus possible foreclosure penalties on your old loan.

5. The Cost of a Late EMI

Late EMIs are expensive. Banks charge penalties up to 3% monthly, and it damages your credit score. Set up auto-debit to avoid this costly mistake.

6. Forced Insurance

Property insurance is often required, but loan protection insurance is optional. Banks can't force you to buy their insurance plan; you have the right to choose your own.

7. CERSAI Charges

CERSAI charges register your mortgage to prevent fraud. After closing, ensure the record is updated. Disclaimer: This is for info only, not advice. Consult a financial expert.