Home loan processing fee and other charges in India: full list, GST and the Key Fact Statement
Every charge on an Indian home loan, from processing fee with 18% GST to legal, valuation, stamp duty and CERSAI, with a worked APR example and what the KFS must show.
The main upfront charges on an Indian home loan are the processing fee plus 18% GST, legal and technical valuation fees, stamp duty on the mortgage document where your state levies it, and the lender's cost of registering the mortgage with CERSAI. Some lenders also offer insurance that is added to the loan. Since 1 October 2024, RBI has required lenders to give you a Key Fact Statement (KFS) before you sign, listing all these charges and an annual percentage rate (APR) that combines interest and fees. A charge not mentioned in the KFS cannot be levied at any stage of the loan without your explicit consent.
This guide is part of the overview of home loan interest rates. Amounts are illustrative.
The full list of charges
| Charge | When it is paid | How it is usually set | Negotiable? |
|---|---|---|---|
| Processing fee | At login or sanction | Percentage of loan, often with a minimum and maximum, or a flat fee; plus 18% GST | Often, especially during offers or for strong profiles |
| Legal / title search fee | Before disbursement | Flat fee, sometimes paid to the lender's panel advocate | Rarely |
| Technical / valuation fee | Before disbursement | Flat fee for the property inspection | Rarely |
| Stamp duty on mortgage | At creation of mortgage | Set by state stamp law; differs for registered mortgage and memorandum of deposit of title deeds; often capped | No, it is a state levy |
| CERSAI charge | After mortgage | Small fee for registering the security interest | No |
| Insurance premium | At disbursement if you opt in | Depends on the policy; may be added to the loan | You choose whether to buy |
| Conversion / switch fee | When moving to a new benchmark or rate | Flat or percentage | Sometimes |
| Penal charges | Only on default | Fixed in the KFS and agreement | Not after the event |
| Prepayment / foreclosure charge | On early repayment | Not allowed on floating-rate loans to individuals for non-business purposes; may apply to fixed-rate loans | Check the agreement |
Charges for statements, duplicate documents or cheque/NACH bounces may also be listed. Penal charges, since RBI's 2023 instructions effective in 2024, must be a fixed charge, not penal interest added to the rate, and must not be capitalised into further interest.
Worked example: what the charges add up to
Illustrative ₹50 lakh loan at 8.5% for 20 years:
- Processing fee: 0.5% of ₹50,00,000 = ₹25,000; GST at 18% = ₹4,500; total ₹29,500
- Legal and technical valuation: ₹15,000
- Stamp duty on the mortgage document and related registration, illustrative: ₹25,000
- Total upfront charges: ₹29,500 + ₹15,000 + ₹25,000 = ₹69,500
The EMI on ₹50 lakh at 8.5% for 240 months is about ₹43,391. If you effectively receive ₹49,30,500 after charges but repay EMIs on ₹50 lakh, the rate that equates the two, which is the idea behind the APR, comes to about 8.69%. Charges therefore add roughly 0.2 percentage points to the cost of this loan. On a smaller loan or a shorter tenure, fixed charges add more.
Enter your own figures in the upfront charges calculator, then put the total in the upfront charges box of the EMI calculator.
What the Key Fact Statement must contain
The KFS is a standardised summary that RBI requires lenders to give before you execute the loan agreement. For a home loan it should show, in a format you can compare across lenders:
- Loan amount, tenure and number of instalments
- Interest rate type (fixed or floating), the benchmark and the spread
- Reset frequency for floating rates
- All fees and charges, with amounts, including those payable to third parties through the lender
- The annual percentage rate (APR)
- Penal charges and the events that trigger them
- Details of recovery agents' engagement, grievance redressal officer and complaint route
- Whether the loan can be transferred to other lenders and on what terms
- A repayment schedule
Ask for the KFS early and in writing. Lenders must give borrowers time to read it before signing; check your lender's KFS for the validity period.
Charges you can question
- Fees that were not in the KFS. Ask for them to be removed or refunded, citing the KFS.
- Insurance presented as compulsory. You can usually decline a life or loan protection policy, or buy equivalent cover elsewhere. Property insurance against fire and similar perils may be a loan condition, but you can ask whether you may choose the insurer. See home loan insurance bundling.
- Processing fee on a rejected application. Ask before you pay whether it is refundable if the loan is not sanctioned.
- Prepayment charges on a floating-rate loan. These are not permitted for individual borrowers' non-business loans.
- Conversion fee that is not disclosed upfront. Ask for the fee and the new spread in writing before applying.
Stamp duty on the mortgage: why it differs by state
Stamp duty is a state subject. Some states levy duty on a memorandum or deposit of title deeds, others on a registered mortgage deed, and rates, caps and exemptions differ. A few states also charge registration fees on the mortgage. Your lender will tell you what applies, but you can check on your state stamps and registration department website, often called the Inspector General of Registration. Remember that this is separate from the stamp duty and registration on your purchase of the property, which is much larger and is generally not funded by the loan.
Frequently asked questions
Is GST charged on the home loan interest?
No. GST at 18% applies to fees such as the processing fee and service charges, not to the interest on the loan.
Can a lender deduct the processing fee from the loan amount?
Some lenders collect it separately; others deduct it at disbursement. Either way, it should match the KFS. If it is deducted, plan to pay the seller the shortfall from your own funds.
Is a "zero processing fee" offer really free?
The fee may be waived, but check the rate, legal and valuation fees and any insurance. Compare the APR in the KFS rather than one line.
Can I claim the processing fee as a tax deduction?
For a self-occupied house, processing fees on a loan used to buy or construct it have generally been treated as part of interest for the interest deduction, subject to the limit. Practice varies; confirm with a chartered accountant. See home loan tax benefits.
Sources
- Reserve Bank of India — Key Fact Statement, penal charges and prepayment instructions
- Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) — registration of security interests
- Central Board of Indirect Taxes and Customs — GST on financial services
- Your state's stamps and registration department — mortgage stamp duty and registration fees
