Most of the people believe that it is only the interest rate applicable on the loan which determines the overall cost of the home loan but it is definitely not so there are a few other fees applicable on a home loan that sums up to produce the overall cost for a home loan.
It starts with processing fees, when a person applies for a home loan at that time the borrower requires to pay processing fees which generally is around 2% of the loan amount applied for but basically it depends on the lender and more importantly it is non-refundable, it means that in case the loan application is rejected or the applicant himself backs out then the processing fees would not be refunded.
Most of the lenders also levy charges that they have incurred for legal and technical verification after that a borrower is also required to pay stamp duty to the Government which depends on the size of the loan borrowed.
Lenders even charge penalty in case the borrower prepays his loan, the penalty is applicable on the pending loan amount that the borrower was supposed to pay, depending on the lender a borrower might have to pay 2%-5% of the pending loan amount as prepayment penalty.
A borrower will also have to pay some extra amount in order to get duplicate statement copy which a person requires for annual tax filling purposes. Certain penalties are also applicable in case of delayed payments or if the cheque bounces.
These are a few extra costs that a borrower might have to encounter, so if a borrower does not want to get surprised every time he is charged with some charge or penalty then he must make things clear in the beginning itself.
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