Hidden Charges in Home Loans Explained | Loan Guidance
Learn about hidden charges in home loans, including processing fees, insurance, legal costs, and penalties, before applying.
2/4/20261 min read
Many borrowers focus only on the home loan interest rate, but the real cost of a home loan lies beyond EMI. Hidden charges can silently increase the total loan cost over years.
Here are the most common hidden charges in home loans.
1. Processing Fees
Banks charge a processing fee that may range from a fixed amount to a percentage of the loan value.
2. Insurance Bundling
Loan-linked insurance is often added without clear explanation. While useful, it should always be optional and transparent.
3. Legal & Technical Charges
Property verification, legal opinion, and technical evaluation costs are usually borne by the borrower.
4. Prepayment & Foreclosure Charges
Closing or prepaying a loan early may attract penalties, especially for fixed-rate loans.
5. GST on Charges
GST is applied on most fees, increasing the overall expense.
Final Thought
A home loan that looks cheap initially can become expensive later. Always calculate the total loan cost, not just the EMI.