Simplified facts and practical information about home loans in a simple language while avoiding the technical jargon associated with it! I was confused with Finance in Home Loans and this Blog is an simple expression! I am a Healing Artist, and not attached with any Financial Commercial Institution and am not responsible for any financial links posted Take care and surf information before committing!
Search This Blog
04 September 2013
Hidden Costs in a Home Loan
Extra Costs in Home Loans
costs’ in ahome loan, a term we all are familiar with. Many a times
we go to purchase some good and we are made to pay ‘taxes extra’ an amount more
than the printed price. Usually there is a small asterix below any
advertisement which we do not pay much attention but during purchase it
increases the price. The same matter happens with home loans. We see heavy
discounts and low interest rates but we do not consider the hidden costs that
we end up paying during taking a loan for purchasing a home.
A home loan may be in simple terms amount
borrowed by the borrower from the lender for a certain period of time with a
certain amount of interest charged with the amount to be paid. As an individual
comes up with the decision of taking a home loan one is usually not aware of
other processing charges and this may lead to quite some amount if not prepared
certain financial institutions may make the borrower open account in their bank
with depositing a certain amount minimum or also the borrower may have to
oblige by taking their shares which can be a pinch as the individual may not be
prepared for this money.
always advisable to get thorough knowledge from different financial
institutions and private brokers for their special requirements other than the
interest rates before taking the step of applying for a home loan.
Hidden Costs Home Loans
fees: The different paper work and documents required as well as the stationary
is added as a fee.
charge: This amount is taken by the bank for the application and other processing
charges. It may vary for every institution but usually may be 0.5% till 1% of
the loan amount.
charges: Some banks may also charge for legal verifications and visits from the
verification teams. This may vary from different individual banks or private
payment charges: Sometimes under unexpected circumstances the borrower may not
be able to pay the monthly installment. Here for the next month amount as
delayed payment is also charged with the amount. The percentage may vary for
penalties: In case the borrower or individual that has taken the loan is
willing to pay the amount prior to the set dates the bank loses on the amount
earned as interest so they apply penalty charges for closure of the loan. Still
the borrower is at benefit as this penalty fee is much lesser than the interest
rate charged by the financial institution.
bounce charges: Penalty charges are levied in case of bouncing of cheque by the