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Home Loan Processing Fee

Processing Fee - Apr 2021

Last Updated 19th Apr 2021

  • Processing fee is a one-time charge to be paid by a home loan borrower to the bank or NBFC.
  • The fee is charged to cover the costs incurred by the lender on the loan process.
  • It is not deductible from the loan amount. Thus, the borrower needs to pay it separately.
  • Home loan charges vary across banks and may differ with each borrower.
  • Presently, HDFC, Axis Bank, SBI offers the NIL processing fee on home loans.
  • Some other charges apart from processing fee are; MODT cgharges, Legal and Technical charges, Loan Conversion Charges, Document handling charges, etc.
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Compare Home Loans Processing Fee of All Banks 2021

Bank Processing Fee as a % of loan amount Minimum and Maximum processing fees*
SBI Home Loan 0.40% Min Rs. 10,000 - Max Rs. 10,000
HDFC Home Loan 0.50% Min Rs. 3,000 - Max Rs. 10,000
Citibank Home Loan - -
Bank of Baroda 0.50% Min Rs. 7,500 - Max Rs. 25,000
ICICI Bank 0.25% Min Rs. 3,000 - Max Rs. 5,000
Axis Bank 0.20% Min Rs. 2,500 - Max Rs. 25,000
PNB Housing Finance 0.50% -
LIC Housing Finance - Min Rs.
Bajaj Home Finance 0.35% -
Sundaram Home Finance - Max Rs. 3,000
Kotak Bank - Max Rs. 10,000
Yes Bank 1.00% Max Rs. 15,000
Syndicate Bank 0.13% Min Rs. 500 - Max Rs. 5,000
IDFC First Bank - Min Rs. 5,000 - Max Rs. 5,000
Karnataka Bank 0.25% Min Rs. 250
Indian Bank 0.23% Max Rs. 20,381
GIC Housing Finance - Min Rs. 2,500
Tata Capital Home Finance 0.50% -
Dhan Laxmi Bank 1.00% Min Rs. 10,000
Aadhar Housing Finance - Min Rs. 3,500
Corporation Bank 0.50% Min Rs. 1,000 - Max Rs. 50,000
Bank of Maharashtra - -
LT Housing Finance 2.00% Min Rs. 4,999
Andhra Bank 0.50% Max Rs. 10,000
UCO Bank 0.50% Min Rs. 1,500 - Max Rs. 15,000
Standard Chartered Bank 1.00% Min Rs. 5,000 - Max Rs. 10,000
PNB 0.35% Min Rs. 2,500 - Max Rs. 15,000
Reliance Capital 1.00% Min Rs. 3,000 - Max Rs. 6,500
OBC 0.50% Max Rs. 20,000
Jammu And Kashmir Bank 0.25% Min Rs. 500 - Max Rs. 10,000
IDBI Bank 0.50% Min Rs. 2,500
Federal Bank 0.50% Min Rs. 3,000 - Max Rs. 7,500
DCB Bank 2.00% Min Rs. 5,000
Aavas Financiers 1.00% -
Central Bank of India 0.50% Max Rs. 20,000
Bank of India 0.25% Min Rs. 1,000 - Max Rs. 20,000
United Bank of India 0.59% Min Rs. 1,180 - Max Rs. 11,800
Allahabad Bank 0.40% Max Rs. 50,000
RBL Bank - Min Rs. 5,000 - Max Rs. 15,000
Karur Vysya Bank - Min Rs. 5,000
Indian Overseas Bank 0.53% Min Rs. 8,900 - Max Rs. 13,350
HSBC Bank 1.00% Max Rs. 10,000
Edelweiss 0.25% -
DBS Bank - Max Rs. 10,000
Piramal Housing Finance 0.10% -
Canara Bank 0.50% Min Rs. 1,500 - Max Rs. 10,000
IIFL 1.25% -
Union Bank of India 0.50% Max Rs. 15,000
Indiabulls - Min Rs. 7,500 - Max Rs. 10,000
South Indian Bank 1.00% Max Rs. 10,000
Punjab and Sind Bank 0.25% Min Rs. 1,000 - Max Rs. 15,000
Lakshmi Vilas Bank 0.40% Min Rs. 10,000 - Max Rs. 20,000

Home Loan charges

Home loan processing fee is a one-time home loan charge that is levied by a bank on a borrower at the time of loan processing. Most of the banks or HFCs charge housing loan processing fees. In most of the cases, processing fee is non-refundable even if the loan doesn't get sanctioned. The processing charges for home loans vary from one bank to another. Many banks come out with special zero processing fee home loan schemes under limited period offers. Also, processing fee waiver is provided to pre-approved home loan borrowers.

MODT Charges

MODT stands for Memorandum of Deposit of Title Deed that is applicable to all home loan borrowers. This fee is charged for an undertaking that you are submitting your property documents with the bank with your own choice. MODT charges may range from 0.1% to 0.5% of loan amount and may vary from state to state.Some banks prefer MODT documents that are registered with a Government authorized stamp duty. The charge is initially incurred by the Bank, but later is charged by the home loan borrower in the form of MODT charge.

Zero Processing Fee Home Loan

The processing fee is an additional charge other than the interest that is to be paid by home loan borrowers to get the loan processed. Bank processing fees may vary across lenders. Processing fees usually cost a lot to borrowers, since it is charged on the principal amount, which is high. However, some top lenders like SBI, HDFC etc tend to waive off the processing charge for home loan borrowers from time to time, as a reward to customers to encourage home loans. Presently HDFC, Axis Bank, SBI offers home loans at zero processing fee.

Other Fee & Charges Applicable on House Loan

Home loan borrowers are usually aware of the interest charges to be paid by them. Home loans without processing fees are known to all, but there are certain home loan charges and fees that are compulsory to be paid. These fees are charged because the lender bears certain expenses to sanction the loan with all formalities. In order to cover these expenses, certain fees are charged. These could be related to your loan, documents submission, or to legal formalities. Some of them are listed below:

Legal and Technical Charges

Legal and technical charges are levied once you submit your property documents to the bank in order to verify your documents legally. These charges may range from ₹ 5,000 to ₹ 10,000. Some banks quote a lump sum fees for legal and technical charges including processing fee.

Loan Conversion Charges

This fee is charged at the time of switching your home loan from floating to fixed rate or vice-versa. Loan conversion fee varies from bank to bank. However, most banks charge a conversion fee of 2% of outstanding amount.

Home Loan Prepayment Fees

The fee charged at the time of paying off the entire loan amount or a part of it before the end of tenure is considered as prepayment fee. As per RBI norms, there is no prepayment penalty on housing loans for floating rates. In case of fixed rate loans, lenders can charge a prepayment penalty of up to 2%.

Other than the above mentioned charges, there are some other charges related to house loan like late payment charges which are charged if you miss or delay your EMIs and franking charges which are applicable at some states like Maharashtra and Karnataka.

FAQs

Why do Banks charge processing fees?

Bank charges housing loan processing fee to cover its cost for completing loan related formalities which includes expenses incurred for documents collection, credit appraisal and verification etc.

Is the processing fee on home loan refundable?

Processing fee is meant to cover the cost of loan processing as incurred by the bank to take a decision to lend to you or not. In the majority of the cases, processing fee is non-refundable, unless explicitly agreed with the bank otherwise.

What is the lowest processing fee on home loan?

Bank processing fees are typically charged as a certain % of the loan amount or at the processing rate. However, banks also specify a minimum processing fee to cover their basic costs of loan application processing as well as cap on processing fees to ensure that the borrowers are not over charged.
At the current rates, Piramal Housing Finance charges the lowest processing fees of 0.10% of the loan amount. In terms of the maximum fees, Sundaram Home Finance have the lowest processing fees cap of ₹ 3,000.

What are the other home loan charges in addition to processing fees?

In addition to housing loan processing fees, banks and housing finance companies also have some additional charges, which include MODT Charges, Legal and technical charges, Loan conversion charges, and prepayment fee among others.

How can I get the lowest processing fees?

You can negotiate for a discount in processing fee, if you are taking a large loan amount or you are an existing customer of the bank. In addition to this, it is advisable to do an online comparison of processing fees of all banks in India and choose a home loan which comes at the lowest all-inclusive costs. Cashbacks and special discounts can further reduce the cost of your home loan.

When do I have to pay loan processing charges?

Typically, the processing charges on home loans are to be paid at the time of documents collection in order to get the loan processed.


Home Loan News - Apr 2021
  • 2021-04-16 : Piramal Retail Finance enters consumer & used car finance
    Piramal Retail Finance, a business entity under Piramal Capital and Housing Finance Ltd is planning on diversifying its loan portfolio and serve the customers. It is planning on entering the Consumer and User Car loan segment.
  • 2021-04-13 : Bank credit rise 5.56%; deposits 11.4% in FY21
    RBI reported that the Bank credit which includes retail loans like home, personal, business, car, two-wheeler, education and doctor loan along with business and mudra loans grew 5.56% to Rs 109.51 lakh crore in the financial year ending March 31, 2021. Further, the deposits include fixed and recurring deposits and rose 11.4% to Rs 151.13 lakh crore.
  • 2021-04-13 : Housing finance companies likely to witness a growth of 8-10% in FY22
    ICRA reported that with the increase in housing loan demand in the last quarter the HFCs are likely to witness a growth rate of 6%-8% during the year and 8%-10% in FY2021-22.
  • 2021-04-13 : Kotak Mahindra Bank kept its home loan rate unchanged at 6.65%
    Even as some of the banks have hiked their home loan interest rate, Kotak Mahindra Bank has kept the home loan rate unchanged at 6.65%. The interest rate is applicable for both the home loan and balance transfer product. The bank is aiming to increase its share in the housing loan market.
  • 2021-04-13 : Bandhan Bank’s collection efficiency ratio at 96% in Q4
    Bandhan Bank reported an overall collection efficiency of 96% for the quarter ending March 2021. Total advances which include retail loans like home, personal, business, car, two-wheeler education and doctor loan along with business and mudra loans grew by 21% at ₹87,054 crores. Deposits which includes fixed and recurring deposits grew by 37% at ₹77,972 crores. Further, CASA deposits increased by 61 per cent at ₹33,827 crores.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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