The loan market of India has witnessed a growth of 28% in the 3rd financial quarter of 2018. One of the primary reasons for this is an easier and more hassle-free application process plus additional lucrative benefits offered by lenders.
A loan against property, also termed as the mortgage loan is a secured loan that provides a substantial amount to its borrowers to cater to various personal and professional needs.
A loan against property provides a longer tenure that lowers your EMI amount and reduces the strain on your budget. Apart from the mortgage loan, your lender charges several other fees on your loan such as processing fees, statement charges, late-payment fees, etc.
Thus, to avoid confusion with your loan repayment amount, you should have proper knowledge of mortgage loan interest rates and other applicable costs. Given below are some fees for a loan against property that you should know.
Interest Rate
Your interest rate will depend on the MCLR which depends on the repo rate published by the RBI. There are two types of interest available to you that you can choose from:
- A fixed-rate of interest – Availing a loan at a fixed rate of interest will ensure that the interest rate of your loan will remain fixed throughout the loan tenure irrespective of the change in MCLR.
- Floating rate of interest –A loan at a floating rate of interest will confirm the change in the mortgage loan interest rate of your loan as and when the MCLR changes.
Statement Charges
Financial institutions and NBFCs charge a fee for issuing hard copies of your mortgage loan statement.
They can also charge a minimal amount for providing interest and principal amount statement.
Processing Fee
When you submit your loan against the property application form, your lender will charge a one-time payment to process your application. This fee is known as the processing fee and is usually 1% to 2% of your loan amount.
Late Payment Fee
Your lender will charge a certain amount on your EMI if you fail to make a payment on time. Thus, to avoid such charges, you must pay your dues on time. Paying your EMIs on time will also help you maintain a good credit score which affects your loan against property eligibility.
Cheque Bounce Fee
Your cheque may bounce due to a lack of adequate funds in your bank account on your due date. Thus, to make up for such loss, your lender will charge a minimal amount on your EMI as a bounce charge. An EMI bounce charge may range anywhere up to Rs. 3000, depending on the type of loan and EMI amount.
Foreclosure Charges
Foreclosing your loan also helps in lowering your loan against property interest rates. If you have an adequate fund in hand, you can choose to pay the total outstanding amount and close your loan.
Part-payment Charges
To lower the total interest payable on your loan, you can choose to make part-payments if you have adequate cash flow. Some lenders charge a minimal or no amount for a pre-payment.
The part-payment and foreclosure charges will depend on your choice of the mortgage loan interest rate. You can choose from two types of interest rates, that is a floating interest rate and a fixed interest rate.
Several financial institutions and NBFCs offer loans against property with attractive part-payment and foreclosure charges. Bajaj Finserv is such an NBFC that provides loans and other financial products at attractive interest rates and minimal part-payment and foreclosure charges against minimal documentation. They also offer a balance transfer facility, online account access, flexible EMI tenure, instant approval, etc.
Bajaj Finserv has also introduced pre-approved offers to make the application process fast and hassle-free. These pre-approved offers are available on both secured loans like home loans and unsecured credits such as business loans and personal loans. You can check your pre-approved offer by sharing minimal details like your name and your phone number.
Apart from the discussed charges, there are other fees that your lender may charge. These charges may include a one-time property evaluation fee, administration charges, etc. Thus, make sure you enquire about the applicable charges of your lenders and choose one with minimal costs.