LIC Home Loan Processing Fees and Other Charges

When planning to apply for a home loan from LIC Housing Finance Limited, it’s important to understand the LIC home loan processing fee. This fee is crucial for covering the administrative expenses involved in processing your application.

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LIC Home Loan Processing Fee Structure

Here’s a detailed breakdown of the processing fees for different types of LIC home loans:

Loan Types	Processing Fee
Standard Home Loans (Salaried, Self-Employed)	Up to 0.50% of the loan amount + applicable GST
Special Schemes (e.g., for Govt employees)	Varies (sometimes reduced or waived during promotions)
NRI Home Loans	Up to 0.50% of the loan amount + applicable GST
Home Construction Loans	Up to 0.50% of the loan amount + applicable GST
Plot Loans	Up to 0.50% of the loan amount + applicable GST
Home Extension Loans	Up to 0.50% of the loan amount + applicable GST
Top Up on Existing Home Loans	Up to 0.50% of the loan amount + applicable GST

Check Out: Home Loan Eligibility – Salaried vs Self-Employed

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LIC Home Loan Additional Fees and Charges

When securing a home loan from LIC Housing Finance, it’s important to account for various fees beyond the basic processing charges. Here’s an updated and accurate summary of the potential additional costs:

Charge Type	Amount/Rate
Statutory Charges	Rs. 250 – Rs. 1,000
Check Bounce Charges	Rs. 350
Document Retrieval Charges	Rs. 2,500
ECS Dishonour Charges	Rs. 200
Charges for Providing Document List	Rs. 500
Late EMI Payment Charges	1.5% – 2% per month on overdue amount
Charges for Photocopies of Title Documents	Rs. 1,000
Prepayment Charges	Applicable if you repay the loan before tenure (varies by loan type)
Foreclosure Charges	Charges for closing the loan before the tenure ends
Loan Conversion Fees	Charges for switching to a lower interest rate
Stamp Duty & Documentation Charges	Fees vary based on state laws and property value

Check Out: LIC Housing Finance Home Loan Eligibility Calculator

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LIC Home Loan Prepayment and Foreclosure Charges

For those considering making early payments towards their LIC home loan, the prepayment charges are structured based on the source of funds used for the prepayment:

Payment Source	Prepayment Charge
Own Funds	No charge
Other Sources	2% on the prepaid loan amount

Check Out: Documents Required for LIC Housing Finance Home Loan

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Compare Home Loan Processing Fees of Top Banks and HFCs

Banks/ NBFCs	Processing Fees
SBI	0.35% of the loan amount + GST Minimum: ₹2,000 + GST Maximum: ₹10,000 + GST
HDFC	Up to 0.50% of the loan amount or  ₹3300 (whichever is higher)
LIC Housing Finance	0.25% of the loan amount Minimum: ₹ 5,000 Maximum: ₹50,000
ICICI Bank	Up to 2% of the loan amount
Bank of Baroda	Up to 0.40% of the home loan
Bank of India	0.25% of loan amount (Min ₹2,500 – Max ₹20,000)
Canara Bank	0.50% (Min Rs.1500/-+GST and Max. Rs.10,000/-)
Bajaj Housing Finance	Up to 4% of the loan amount
PNB Housing Finance	0.35% of the loan amount Min: Rs. 2,500/Max: Rs. 15,000/
IDBI Bank	0.50% of loan amount
Axis Bank	1% of the loan amount, minimum Rs. 10,000; Rs. 5,000 +GST upfront

Check Out: LIC Home Loan Prepayment Calculator

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Why Does LIC Take Processing Fees?

• Administrative Costs: Covers application processing, documentation, and verification efforts.
• Legal & Technical Checks: Funds property valuation, legal due diligence, and technical assessments.
• Risk Assessment: Supports credit checks, eligibility evaluations, and loan structuring.
• Compliance & Regulation: Ensures adherence to banking norms and regulatory requirements.

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Is LIC Home Loan Processing Fees Refunded?

LIC home loan processing fees are generally non-refundable and are retained by the lender regardless of whether the loan is closed early, rejected post-approval, or repaid prematurely. 

These fees cover administrative expenses, including documentation, verification, legal due diligence, and technical assessments conducted during the loan setup. 

Refunds are rare and apply only under specific conditions explicitly outlined in the loan agreement or mandated by regulatory guidelines. 

Suggested Read: Profitable Cities for Airbnb Investment 2025

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When Does LIC Collect Home Loan Processing Fees?

LIC collects a one-time, non-refundable processing fee when you submit your home loan application. This fee covers the cost of evaluating your application, including verifying your eligibility and assessing your financial profile.

Am I Still Liable to Pay The Processing Fees if My Home Loan is Sanctioned But I Don’t Avail It?

Yes, you are typically liable to pay the processing fee regardless of whether your loan is approved or rejected.

Processing fees are charged for the administrative work involved in evaluating your application, verifying documents, and approving your loan—regardless of whether you eventually use the funds.

What Happens if LIC Home Loan Processing Fees Cheque Gets Bounced?

If your cheque for LIC’s home loan processing fee bounces, here’s what you need to know:

Immediate Consequences:

1. Your application may be delayed or rejected until the payment issue is resolved.
2. LIC (and your bank) may impose a cheque bounce penalty fee (as per their policy and RBI guidelines).

Steps to Resolve:

• Inform LIC about the bounced cheque and request an alternative payment method (e.g., NEFT/RTGS, demand draft, or online transfer).
• Clear the processing fee along with any additional charges levied due to the bounce.
• Ensure the original cheque is replaced or canceled to avoid further complications.

Suggested Read: 1 Acre Land Price in India 2025

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Is it Possible to Get a Home Loan with Zero Processing Fees?

Yes, it is possible to get a home loan with zero processing fees in India, though it depends on specific conditions, lenders, and timing. Here’s a detailed breakdown:

• Periodic Waivers: Many lenders (e.g., SBI, HDFC, LIC Housing Finance, PNB Housing Finance) occasionally waive processing fees as part of promotional campaigns to attract borrowers. These offers are often time-bound (e.g., festive seasons or year-end schemes).
• Targeted Schemes: Some lenders offer fee waivers to specific borrower segments, such as women applicants, government employees, or first-time homebuyers.
• Pradhan Mantri Awas Yojana (PMAY): Under this scheme, eligible first-time homebuyers (especially in EWS/LIG/MIG categories) may receive subsidies and fee concessions, including reduced or waived processing fees.
• State-Level Schemes: Some state governments or housing boards (e.g., MHADA in Maharashtra) collaborate with lenders to offer subsidized loans with minimal fees.

Suggested Read: Inheritance Rights on Ancestral Property

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How is Home Loan Processing Fees Calculated?

Processing fees are typically calculated as a percentage of the loan amount , though some lenders charge a flat fee. The common range is 0.25% to 2% of the loan principal , depending on the lender and borrower profile.

For a ₹50 lakh loan with a 1% processing fee:
₹50,00,000 × 1% = ₹50,000 (processing fee).
Some lenders may cap the fee (e.g., maximum ₹75,000, even for larger loans).

Suggested Read: TDS on Purchase of Property

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Factors Affecting LIC Home Loan Processing Fees

• Loan amount – higher principal means a larger percentage‑based fee (until it hits the cap).
• Lender’s pricing policy – flat fee, tiered slabs, or percentage rate decide the base charge.
• Borrower segment – women, government staff, or first‑time buyers often get concessional rates.
• Credit score – stronger scores give borrowers bargaining power for a lower fee.
• Property profile – under‑construction or non‑standard properties need extra due‑diligence, pushing costs up.
• Loan type – balance transfer or top‑up loans may carry higher or separate processing fees.
• Documentation load – multiple co‑applicants or complex income proofs increase verification expenses.
• Promotional window – festive or year‑end campaigns can drop the fee to zero.
• Government schemes – PMAY or state housing tie‑ups cap or waive processing charges.

Suggested Read: How to Transfer an Unregistered Property?

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Conclusion

Understanding the LIC home loan processing fee is crucial when planning your finances for a home loan. This fee is designed to cover administrative tasks and varies depending on loan details but typically caps at 0.50% of the loan amount. Knowing this helps ensure there are no surprises during your loan application process.

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Frequently Asked Questions