home loan emi
If you are going to fulfill your dream of buying your first house in 2026 or are thinking of transferring your old home loan to another bank, then taking the decision only on the basis of low interest rates can prove to be a big mistake. Most people focus only on EMI and interest rate, but the real game lies in the charges which are written in the fine print of the loan agreement. These charges gradually drain your pockets and you don’t even realize it.
In an ET report, Adhil Shetty, CEO, Bankbazaar, advises to be wise while taking a home loan. Home loan starts with processing fees and documentation. The bank or housing finance company charges processing fees for vetting your loan application, verifying documents and doing a credit check. Generally this is a small percentage of the loan amount, but if the amount is in lakhs then the fees also go into thousands. Apart from this, separate fees have to be paid for legal investigation and technical valuation of the property. First-time home buyers often take these expenses for granted, even though they can blow up your budget in the beginning. On top of this, there are also government expenses like stamp duty and registration, planning of which is necessary in advance.
Even if the loan is repaid early, there may be a loss.
Many people think that when they have money, they will repay the loan quickly. The intention is good, but in every loan it is not possible without expenses. There is usually no prepayment penalty on floating rate home loans, but on fixed or hybrid rate loans, the bank may impose a charge. Another important point is that when you make partial prepayment, the bank often keeps the EMI the same and reduces the loan tenure. This saves interest. But many customers are not told that if they wish, they can also choose the option of reducing EMI. Prepayment made without this clear information can give you less benefit and more trouble.
There is also a bill to change the interest rate
Market conditions keep changing. Sometimes floating rate seems cheaper, sometimes fixed rate is more secure. Banks let you change the rate, but not for free. For this, conversion fee is charged, which is a part of the outstanding loan amount. If you do not calculate properly, it is possible that the amount of savings you were expecting from low interest may end up in fees. Therefore, before changing the rate, it is important to see whether the total profit is actually being made or not. According to experts, the conversion fee usually ranges from 0.25% to 0.5% of your outstanding loan amount. On an outstanding balance of Rs 40 lakh, it will be between Rs 10,000 to Rs 20,000.
Balance transfer is not beneficial every time
Often after a few years, other banks come forward with offers of lower interest rates. The idea of loan transfer sounds good, but it also has hidden expenses. The new bank again charges processing fees, gets the property valued and sometimes may also impose a penalty on closing the old loan. If the difference in interest rates is very small, then this transfer can give you less benefit and more hassle. Therefore, the decision should not be taken just by looking at the advertisement, but by adding the entire cost.
Even a short delay in EMI can prove costly
Sometimes salary comes late or some emergency arises. In such a situation, penalty and bounce charge may be imposed on late payment of EMI. On top of this, it also affects your credit score, which can make it difficult to take a loan in future. The easiest way to avoid this is to avail auto-debit facility and always maintain sufficient balance in the account. This little wisdom can save you from big trouble.
Don’t lose money in the name of insurance
Most of the misconceptions occur regarding insurance along with home loan. Property insurance is often required so that the bank is protected in case of damage to the home. But taking loan protection insurance should be on your choice. Many times banks add a lump sum insurance premium to the loan without explaining it clearly, due to which the EMI increases. Remember, you have the freedom to choose the insurance company. By comparison, a term plan can save you lakhs of rupees in the long run.
A small fee that saves the future
There is confusion after hearing the name CERSAI charge, but it is very important. This fee is charged to register the mortgage of your property in a central registration system, so that multiple loans cannot be taken against the same house. The amount may be small, but after the loan is over, definitely check whether the entry has been updated or not. Otherwise, you may face problems while selling the house or taking a loan again. Home loan is not a decision of one or two years, but a responsibility of many decades. As important as the interest rate is, it is equally important to understand each charge. Read the agreement carefully, don’t be afraid to ask questions and sign only after calculating the total cost.
Also read- Budget 2026-27: A new team is preparing the country’s budget, this time there is no finance secretary.