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Home Loan Processing Fee

Processing Fee for Home Loan - Jul 2021

Last Updated 29th Jul 2021

  • Processing fee is a one-time charge to be paid by a home loan borrower to the bank or NBFC.
  • The processing fee for Home Loan is charged to cover the costs incurred by the lender on the loan process.
  • It is not deductible from the loan amount. Thus, you need to pay it separately.
  • Home loan charges vary across banks and may differ with each borrower.
  • Presently, Citibank, Sundaram Home Finance offers the NIL processing fee on home loans.
  • Some other charges apart from processing fee are; MODT charges, 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 ₹ 10,000, Max
HDFC Home Loan 0.50% Min ₹ 3,000, Max ₹ 10,000
Citibank Home Loan -
Bank of Baroda 0.50% Min ₹ 7,500, Max ₹ 25,000
ICICI Bank 0.25% Min ₹ 3,000, Max ₹ 5,000
Axis Bank 0.20% Min ₹ 10,000, Max ₹ 25,000
PNB Housing Finance 0.50% -
LIC Housing Finance - Min ₹ 10,000, Max ₹ 15,000
Bajaj Home Finance 0.35% -
Sundaram Home Finance -
Kotak Bank - Max ₹ 10,000
Yes Bank 1.00% Max ₹ 15,000
Syndicate Bank 0.13% Min ₹ 500, Max ₹ 5,000
IDFC First Bank - Min ₹ 5,000, Max ₹ 5,000
Reliance Capital 0.50% -
PNB 0.35% Min ₹ 2,500, Max ₹ 15,000

Processing Fee Home Loan

Home loan processing fee is a one-time home loan charge that is levied by a bank on your home loan at the time of loan processing. While most of the banks or HFCs charge housing loan processing fees, some banks such as Citibank, Sundaram Home Finance do not charge any processing fee for home loans. In most of the cases, the 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 if you are eligible under pre-approved home loan borrowers eligibility.

Zero Processing Fee Home Loan in 2021

As discussed above, the processing fee for home loan is an additional charge excluding the home loan interest that is to be paid by you 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, SBI Home Loan Processing , HDFC Home Loan Processing Fee and processing fee for other top lenders may be waived off as a reward. Top Home Loan Lenders tend to waive off the processing charge for home loan borrowers from time to time, as a reward to customers to encourage home loans.Below-mentioned is the list of banks that offer nil processing fee for home loans.

Bank Name with Zero Processing Fees Home Loan Interest Rates
Citibank 6.50%
Sundaram Home Finance 6.95%

Other Fee & Charges Applicable on House Loan

Apart from the processing fee, you may also be charged with various other fees and charges. These could be related to your loan, documents submission, or 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%.

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.

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


Why do Banks charge processing fees?

Banks charge a 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 make a decision to lend to you or not. In the majority of the cases, the 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 percentage 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 a cap on processing fees to ensure that the borrowers are not overcharged.
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, ICICI Bank, Syndicate Bank, IDFC First Bank have the lowest processing fees cap of ₹ 5,000. Some Banks even charge NIL Processing fee on home loans such as Citibank, Sundaram Home Finance.

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.Home Loan charges may vary across all lenders.

How can I get the lowest processing fees?

You can negotiate for a discount in home loan 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.

How is loan processing fees calculated on a home loan?

A processing fee is a one-time fee and is calculated as a percentage of the total loan amount. The percentage is fixed by the lender and varies from lender to lender.

How to compare processing fees across banks on a home loan?

The comparison of top banks is provided in the table above. You can easily compare the processing fees of top banks at online marketplace like MyLoanCare.

What is the processing fee for an SBI home loan?

As per the current rates, the SBI Home Loan Processing fee is 0.40% of the loan amount, with Min ₹ 10,000, Max .

What is the processing fee for an HDFC home loan?

As per the current rates, the HDFC Home Loan Processing fee is 0.50% % of the loan amount, with Min ₹ 3,000, Max ₹ 10,000.

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