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Home Loan Processing Fees and Charges: A Comprehensive Guide

By: Gopal Agarwal


Purchasing a home is a significant financial decision for most individuals, and more often than not, it involves taking out a home loan. While the interest rate is a crucial aspect of a home loan, borrowers must also be aware of the various processing fees and charges associated with the loan. This article aims to provide a comprehensive understanding of home loan processing fees and charges, their components, and their implications for borrowers.

What are Home Loan Processing Fees?

Home loan processing fees are charges levied by banks or financial institutions for processing and approving a home loan application. These fees cover the administrative costs incurred by the lender during the loan approval process, including verification of documents, property valuation, credit checks, legal formalities, and other associated activities.

Components of Home Loan Processing Fees:

a) Application Fee: An application fee is charged at the time of submitting the home loan application. It covers the initial processing costs and varies from lender to lender. This fee is usually non-refundable, regardless of whether the loan is approved or not.

b) Administrative Charges: Administrative charges encompass the costs incurred by the lender for processing the loan application. This includes the expenses associated with document verification, credit appraisal, and other administrative tasks.

c) Legal and Documentation Charges: Legal and documentation charges cover the expenses involved in conducting a legal examination of property documents, preparing the loan agreement, stamp duty, and registration charges. These charges ensure compliance with legal requirements and protect the interests of both the borrower and the lender.

d) Valuation Charges: Valuation charges are incurred to assess the value of the property being financed. These charges cover the expenses of engaging a professional valuer who determines the fair market value of the property to ascertain its eligibility for the loan.

e) Technical Inspection Charges: In certain cases, lenders may require a technical inspection of the property to evaluate its structural integrity and construction quality. Technical inspection charges cover the costs associated with engaging an engineer or architect to conduct this assessment.

f) Credit Report Charges: Lenders obtain credit reports from credit bureaus to assess the creditworthiness of borrowers. Credit report charges are levied to cover the costs of obtaining and analysing these reports.

Factors Affecting Home Loan Processing Fees:

a) Loan Amount: The processing fees for a home loan may vary based on the loan amount. Typically, higher loan amounts attract higher processing fees.

b) Lender Policies: Different lenders have varying policies regarding processing fees and charges. It is essential for borrowers to compare the offerings of multiple lenders to understand the differences in fees and choose the most favourable option.

c) Negotiation: In some cases, borrowers may be able to negotiate the processing fees with the lender. Factors such as good credit history, existing relationship with the lender, or applying during promotional periods may provide room for negotiation.

Implications for Borrowers:

a) Upfront Costs: Home loan processing fees add to the upfront costs associated with obtaining a home loan. Borrowers need to factor in these costs when budgeting for their home purchase, as they can significantly impact the total amount required for the loan.

b) Comparison Shopping: Due diligence and comparison shopping play a crucial role in finding the most suitable home loan. Borrowers should compare processing fees, interest rates, and other associated charges offered by different lenders to make an informed decision.

c) Affordability and Repayment Capacity: While processing fees are a one-time expense, borrowers must consider their affordability and repayment capacity in light of these charges. It is essential to assess the overall cost of the loan, including the processing fees, to ensure comfortable repayment without straining one’s finances.

d) Refund Policy: Borrowers should inquire about the refund policy in case the loan application is rejected or withdrawn. Some lenders may refund a portion of the processing fees, while others may have a non-refundable policy.


Home loan processing fees and charges are an integral part of the loan application process. Understanding the components and implications of these charges is essential for borrowers to make informed decisions. Conducting thorough research, comparing multiple lenders, and negotiating the fees when possible can help borrowers minimize upfront costs and choose the most suitable home loan. It is crucial to carefully assess the overall cost of the loan, including processing fees, along with the interest rate, tenure, and repayment capacity to ensure a smooth and financially sound home buying journey.

BanksProcessing Fee (Min. in %)Processing Fee Amount (Min)
SBI Home Loan0.4%Rs.10,000
HDFC Home Loan0.5%Rs.3,000
Axis Home Loan1%Rs.10,000
LIC Home LoanRs.10,000
IDBI Home Loan0.5%Rs.2,500
IOB Home Loan0.5%Rs.20,000
Union Bank of India0.5%Rs.15,000
Indiabulls Home Loan2%
Kotak Home Loan0.5%
IIFL Home Loan1.25%
L&T Home Loan0.25%
Yes Bank Home Loan2%Rs.10,000
Bank of India Home Loan0.25%Rs.1,500
Bank of Baroda Home Loan0.25%Rs.8,500
UCO Bank Home Loan0.5%Rs.1,500
PNB Home Loan0.35%Rs.2,500
IDFC First Home LoanRs.10,000
Standard Chartered Home Loan0.5%
HSBC Home Loan1%Rs.10,000
DBS Home LoanRs.10,000
Canara Bank0.5%Rs.1,500
Central Bank of India Home Loan0.5%Rs.20,000
Karur Vysya Home LoanRs.2,500
Karnataka Bank Home Loan1%
Dhanlaxmi Bank Home Loan1%Rs.10,000
Tata Capital Home Loan0.5%
Aditya Birla Home Loan0.5%
Federal Bank0.5%
South Indian Bank Home Loan0.5%Rs.5,000
Jammu and Kashmir Bank Home Loan0.25%Rs.5,000
Bandhan Bank Home Loan0.25%

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