When applying for a home loan in India, it’s important to understand the mortgage charges for home loans. These charges, like processing fees, property valuation costs, and prepayment penalties, can add to the total loan cost. Knowing these charges helps you make better choices and avoid surprises.
What are Mortgage Charges for Home Loan?
Mortgage charges are the fees charged by lenders when you take a home loan. These charges cover things like processing the loan, checking the property value, legal work, and more. They are usually added to the loan amount and can be paid upfront or during the loan period.
- Processing Fees: This is charged for processing your home loan application.
- Valuation Charges: Charged for assessing the property’s value.
- Legal & Documentation Charges: Fees for legal verification and necessary documentation.
- Prepayment Penalty: Charged when you pay off the loan early.
- Stamp Duty: Government fee for executing the home loan agreement.
- Late Payment Charges: Penalty for missing an EMI.
- Inspection Charges: Fees for checking the condition of the property during the loan tenure.
Read More: What is a Mortgage Loan?
Mortgage Charges by Leading Banks in India
Mortgage charges by leading banks in India include fees like processing, legal, and prepayment charges.
| Bank Name | Processing Fee | Valuation Charges | Prepayment Charges | Late Payment Charges | Stamp Duty |
|---|---|---|---|---|---|
| SBI | 0.35% of the loan amount (max ₹10,000) | ₹2,000 – ₹10,000 | Nil | ₹500 per EMI missed | 4%-7% depending on state |
| HDFC | 0.50% of the loan amount (mIN ₹3,300) | ₹5,000 | 2% + GST | ₹500 per EMI missed | 4%-7% depending on state |
| ICICI Bank | 0.50% of the loan amount (max ₹5,000)+ Taxes | ₹5,000 | 2% + GST | ₹1,000 per EMI missed | 4%-7% depending on state |
| Axis Bank | 1.00% of the loan amount (max ₹10,000) + Taxes | ₹5,000 – ₹10,000 | – Nil for floating – 2% for fixed rate loan | ₹1,000 per EMI missed | 4%-7% depending on state |
| PNB Housing | 0.35% of the loan amount (max ₹15,000) | ₹500 + GST or 0.30% loan amount | 2% + GST | ₹500 per EMI missed | 4%-7% depending on state |
| Bank of Baroda | 0.35% of the loan amount (max ₹15,000) | ₹8,500 – ₹25,000 | Nil | ₹500 per EMI missed | 4%-7% depending on state |
| IDFC First Bank | 0.25% of the loan amount (max 3.00%) | 0.25% to 0.50% +GST | 2%-4% of prepayment | ₹500 per EMI missed | 4%-7% depending on state |
| Tata Capital | 0.50% of the loan amount + Taxes | 0.5% + GST | 2% + GST | ₹500 per EMI missed | 4%-7% depending on state |
| Kotak Mahindra | 0.50% of the loan amount (max 1.00%) | – | 0.5-3% + GST | ₹500 per EMI missed | 4%-7% depending on state |
| Bank of India | 0.25% of the loan amount (max ₹20,000) + Taxes | ₹5,000 | 0.65% to 2.25% + GST | ₹500 per EMI missed | 4%-7% depending on state |
| LIC Housing | 0.50% of the loan amount | ₹5,000 | – Nil for floating -2% for fixed rate loan | ₹500 per EMI missed | 4%-7% depending on state |
Check Out: Types of Mortgage Loans in India
Types of Mortgage Charges for Home Loan
The most common mortgage charges a borrower might encounter when applying for a home loan in India:
| Charge Type | Definition | Typical Range |
|---|---|---|
| Processing Fees | Fee charged by the bank for processing the loan application. | Typically ranges from 0.25% to 2% of the loan amount, with some banks capping it at ₹5,000-₹15,000. |
| Valuation Charges | Charges for property evaluation to assess its market value. | ₹5,000 to ₹15,000, depending on the property type and location. |
| Legal & Documentation Fees | This charge is for the legal checks of the property and documentation work. | ₹2,000 to ₹10,000 for legal verification. |
| Prepayment Penalty | Charged if you wish to prepay the loan or repay it fully before the end of the tenure. | 2%-3% of the prepayment amount. |
| Stamp Duty | A government-mandated charge for executing the loan agreement. | Varies by state, generally between 4%-7% of the property value. |
| Late Payment Charges | Charged if you miss an EMI payment. | ₹500 to ₹1,000 per missed EMI. |
| Inspection Charges | Some lenders charge for periodic property inspections. | Fees vary depending on lender policy. |
Also Read: What is a Mortgage Deed?
Government Schemes & Subsidies
The Indian government offers various schemes to make homeownership more affordable by providing subsidies and benefits that reduce mortgage charges on home loans.
- PMAY (Pradhan Mantri Awas Yojana): Interest subsidy of up to 6.5% on home loans for EWS, LIG, and MIG categories.
- CLSS (Credit Linked Subsidy Scheme): Interest subsidy of 6.5% for EWS/LIG (loans up to ₹6 lakh), 4% for MIG-I (loans up to ₹9 lakh), and 3% for MIG-II (loans up to ₹12 lakh).
- Tax Benefits: Deduction of up to ₹1.5 lakh on principal repayment (Section 80C) and up to ₹2 lakh on interest paid for self-occupied properties (Section 24(b)).
- Reduced GST Rates: Affordable housing projects attract a lower GST rate of 1%, while other housing projects have a 5% GST, making home purchases more economical.
Also Read: Pradhan Mantri Awas Yojana (PMAY) Scheme Details
How Mortgage Charges Impact the Cost of Your Home Loan
Mortgage charges significantly influence the overall cost of your home loan by adding upfront and recurring expenses.
| Charge Type | Typical Cost | Impact on ₹50L Loan | Smart Saving Tip |
|---|---|---|---|
| Interest Rate | 8.25% – 9.75% p.a. | ₹49L – ₹58L (total interest for 20 yrs) | Opt for floating rates to benefit from future rate cuts |
| Processing Fee | 0.25% – 1% (₹15k-₹50k) | ₹12,500 – ₹50,000 | Negotiate or apply online for 25-50% discount |
| Prepayment Charges | 0% (floating), 2-3% (fixed) | ₹0 – ₹1.5L (if prepaying ₹50L) | Always choose floating-rate loans |
| Legal/Technical | ₹8,000 – ₹20,000 | Fixed ₹15,000 (avg) | Compare banks as these are non-negotiable |
| Loan Insurance | 0.5% – 1.2% of loan amount | ₹25,000 – ₹60,000 | Buy separate term insurance instead |
| Stamp Duty | 4% – 8% of property value | ₹2L – ₹4L (on ₹50L prop) | Avail women/state subsidies (up to 5% off) |
| Late Payment | 1-2% of EMI per month | ₹600-₹1k/month penalty | Set up auto-debit to avoid delays |
Key Takeaways:
- Interest + Stamp Duty = 90% of extra costs
- Processing + Insurance = Avoidable ₹75k-1.1L
- Fixed-rate loans cost 2-3L more if prepaid early
Tip: Use PMAY subsidy (6.5% for EWS) to save ₹2.67L on interest!
Check Out: Home Loan Tax Benefits
Home Loan vs Mortgage Loan
A home loan is specifically for purchasing property, while a mortgage loan uses existing property as collateral for other financial needs.
| Criteria | Home Loan | Mortgage Loan |
|---|---|---|
| Definition | Loan to purchase, construct, or renovate a home. | Loan secured by property for various purposes. |
| Purpose | Exclusively for housing-related expenses. | Can be used for personal, business, or other needs. |
| Property Usage | For the property being purchased or built. | Existing property is pledged as collateral. |
| Flexibility | Restricted to home-related activities. | Flexible usage, including business or education. |
| Loan-to-Value (LTV) | Higher LTV (up to 90% of property value). | Lower LTV compared to home loans. |
| Interest Rates | Lower rates due to housing focus. | Varies based on borrower profile and property type. |
| Tenure | Longer tenure (up to 30 years). | Comparatively shorter tenure. |
| Eligibility | Based on income, property value, and credit score. | Evaluated on creditworthiness and property value. |
| Examples | Buying, constructing, or renovating a home. | Funding business, education, or medical expenses. |
Check Out: Home Loan Eligibility: Everything You Need to Know
Tips to Minimize Mortgage Charges for Home Loan
You can reduce mortgage charges by comparing offers, negotiating fees, and leveraging government schemes.
- Compare Loan Offers: Choose banks with lower processing and legal fees.
- Negotiate with Lenders: Request waivers or reductions on charges.
- Opt for Government Schemes: Use PMAY or CLSS subsidies to lower costs.
- Choose Floating Rates: Avoid prepayment penalties with floating interest loans.
- Make Larger Down Payments: Reduce loan amount and related charges.
- Check for Special Offers: Look for festive or promotional fee waivers.
- Avoid Late Payments: Prevent extra charges by paying EMIs on time.
- Understand All Charges: Review the loan agreement to spot hidden fees.
What’s the Best Way to Get a Mortgage Loan?
The best way to get a mortgage loan involves thorough research, smart financial planning, and comparing multiple offers.
- Check Your Credit Score: Higher scores get better interest rates and lower processing fees.
- Compare Multiple Lenders: Research banks and NBFCs for the best loan terms.
- Use Online Loan Calculators: Estimate EMIs and total loan cost before applying.
- Opt for Pre-Approved Loans: Faster processing and lower charges for existing customers.
- Consider Government Schemes: Apply for PMAY or CLSS to get interest subsidies.
- Negotiate Loan Terms: Request fee waivers or better interest rates.
- Read the Fine Print: Understand all charges, including hidden fees, before signing.
- Choose the Right Loan Tenure: A shorter tenure reduces interest costs, while longer tenures lower EMIs.
How Are Mortgage Charges Calculated?
Here’s an easy-to-understand table showing how different mortgage charges are calculated:
| Charge Type | Formula | Example Calculation | Notes |
|---|---|---|---|
| Processing Fee | Loan amount × Processing fee % | ₹50 lakh × 0.5% = ₹25,000+ GST (18%) → ₹29,500 | Some banks waive this fee during offers |
| Stamp Duty and Registration | Loan amount × Stamp duty % | ₹40 lakh × 0.2% = ₹8,000 | Varies by state |
| Prepayment Charges | Prepaid amount × Prepayment % | ₹10 lakh × 2% = ₹20,000 | No fee on floating-rate loans for individuals |
| Late Payment Penalty | Overdue EMI × Penalty % | ₹30,000 × 2% = ₹600 | Applies monthly on overdue EMI |
| Legal and Technical Fees | Flat fee or % of loan amount | ₹5,000 – ₹10,000 or 0.1% of loan amount | Varies by lender |
| Conversion Fee | Outstanding loan × Conversion % | ₹30 lakh × 0.5% = ₹15,000 | For switching interest types |
Note: Always check the loan agreement to know the exact charges before finalizing the loan.
Check Out: Compare Mortgage Loan Interest Rates 2025
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Conclusion
Before finalizing your home loan, carefully consider all mortgage charges for home loan, as even small differences can impact long-term costs. Compare lenders to find the best deal for your financial goals.
Looking for the best home loan with minimal charges? Visit Credit Dharma today to compare options and find the right loan for you!
Frequently Asked Questions
The eligibility for a mortgage loan depends on factors like age, income, credit score, employment status, and property value.
– Age: Typically, between 21 and 65 years.
– Income: Stable and sufficient to cover EMIs.
– Credit Score: Preferably 750 or above.
– Employment Status: Salaried or self-employed with a steady income.
– Property Value: The loan amount depends on the property’s market value.
– Debt-to-Income Ratio: Should ideally be below 40-50%.
The duration of a mortgage loan typically ranges from 5 to 30 years, depending on the lender and loan terms.
A mortgage loan is good for buying property as it offers long-term financing, but it’s important to consider the interest rates and charges before applying.
No, banks typically offer up to 75-90% of the property value as a home loan; you need to pay 10-25% as a down payment.
Yes, you can negotiate mortgage rates by comparing offers, highlighting your creditworthiness, and using competing rates to bargain with your preferred lender.
Yes, a good CIBIL score (typically 700 or higher) is crucial for securing a mortgage loan, as it helps lenders assess your creditworthiness and offer better interest rates and terms.
HDFC Home Loan
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