Everything You Need to Know About Mortgage Loan Processing Fees

When applying for a Loan Against Property (LAP), also known as a mortgage loan, it is important to understand the various associated charges. One such charge is the mortgage loan processing fee—a one-time, upfront payment that borrowers must account for during the application stage.  

This article outlines what this fee entails, its significance, and other charges to consider when applying for a LAP.  

What is a Mortgage Loan Processing Fee?

A mortgage loan processing fee is charged by the lender to cover the cost of evaluating your loan application. This includes verifying your income, property documents, credit profile, and other financial details.  

The processing fee is typically non-refundable and is charged at the time of submitting your application. 

Why Should You Know About the Processing Fee?

Understanding the processing fee is essential for effective financial planning.  

• The processing fee is a part of the upfront cost of availing of a Loan Against Property. Knowing this cost early helps ensure that your finances are in order before proceeding with the loan.  
• The processing fee varies across lenders. Factoring in this fee—alongside interest rates—can help you compare different LAP options and choose the most feasible one.  

Common Charges Beyond the Mortgage Loan Processing Fee 

While the processing fee is a significant upfront cost, it is not the only charge linked to a mortgage loan. If you decide to make a part-prepayment or foreclose your loan ahead of schedule, additional charges may apply. Similarly, if your EMI fails due to insufficient balance or system-related issues, a bounce fee may be imposed. Delayed EMI payments can also attract a late payment penalty. 

Is the Mortgage Loan Processing Fee Negotiable?

Processing fees are usually standardised by the lender, but in certain cases—such as high-value loan amounts—there may be some room for negotiation. It is advisable to discuss this upfront during the application stage. 

Is GST Applicable to the Processing Fee?

Yes, the processing fee on Loan Against Property is subject to GST as per prevailing tax regulations. It is essential to understand a detailed cost breakdown inclusive of taxes. 

Understanding mortgage loan processing fees and other charges not only helps you plan your finances better but also ensures transparency throughout the borrowing journey.