# What are the costs of taking a home loan?

Q1. What are principal costs?

Ans. Principal Amount is the loan amount which the borrower takes from the lender. The most extrusive cost is the principle, but it can’t be actually considered as a cost of the loan. Meanwhile, if you consider EMIs, the principal amount in the initial periods is less and it gradually increases in the later periods. The best and the fastest way to calculate EMI is an online EMI calculator.

Q2. What are interest rates?

Ans. The main charges that a borrower is concerned about are the interest rates imposed on their home loan. And moreover, because of the loan’s initial phase, the interest rate is the highest and then it keeps on decreasing, it becomes a little over the top for the borrower to cope up with it. Furthermore, the interests also vary, namely, Fixed interest rate and Floating interest rate. Usually the online EMI calculators have interest rates as fixed by default.

Q3. What is fixed interest rate?

Ans. Fixed interest rate on the loan specifies the exact amount of interest being charged throughout the life of the loan. The interest rate is kept fixed for the entire duration. This simply means that the principal and interest payments are same for every timely payment.

Q4. What is floating interest rate?

Ans. In Adjustable/Floating interest rate, initially, the interest rate remains same for a few years and then continues to adjust to the prevailing market rate of interest. This signifies that although the principal and interest payments may vary throughout the life of the loan, but an upper limit is observed on the rise in the interest rate.

Q5. What are origination fees?

Ans. This is the fee that is about 0.5% to 1% proportion of the total mortgage loan. This fee is charged by the money lender for processing the application of a new loan or also described as a compensation or commission for bringing the loan up-front.

Q6. What are Document Retrieval charges?

Ans. After the application of the borrower’s loan, when the borrower submits all important documents, the bank deposits all these further to a central storage unit for safety purposes, called the Central Document Repository (CDR). This process is chargeable to the borrower at the time of total repayment, to transfer the documents from the repository to the borrower.

Q7. What is Memorandum of Deposit of Title Deed (MODC)?

Ans. The document that ensures that the borrower has deposited all the title documents of the mortgaged property by his own will, to the lender is called MODC. For this process, the government levies a stamp duty of 0.1-0.2% of the loan amount to register the document.

Q8. What are legal and technical fees?

Ans. The banks have a team of legal and technical professionals that look after the verification of the borrower’s submitted documents. So the bank charges a sum of fees for these services, but in most the cases it is included in the Origination fees.

There are many costs associated while taking a loan, but half of the conclusion can be concluded by using an online EMI calculator. Make sure you are using a reliable EMI calculator. If you want to calculate your EMI please visit https://loankuber.com/.