It is not only the interest rate that a person is required to pay for his home loan but there are a few other charges that a borrower might have to come across and if he is not prepared for them then it can even create a few complications for him. Some of them are mandatory and some of them are applicable only under certain circumstances and hence can be avoided.
When a person applies for a loan at that time the borrower has to pay a processing fee, it can vary from up to 1 percent of the total loan amount, another important thing is that it is essentially non-refundable, it implies that in case the loan is not sanctioned to the applicant or due to some reasons if the applicant himself would want to back out of the deal then he would lose the amount paid as processing fees.
Some of the lenders also charges administrative fees, some of the lenders charge both of them together and some once the loan has been sanctioned, it is same as the processing fees.
If the applicant wants to prepay his loan, then he will have to pay prepayment penalty which would be applicable on the pending loan amount; a lender can levy this penalty only if the borrower is borrowing from some other lender to prepay his loan but if he is prepaying from his own sources then the lender can not charge anything from him.
Some lenders also ask the borrower to get his loan insured which is at least of equal value as of the loan borrowed. These are a few sources that might require a borrower to spend some extra on the loan.
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