“ When assessing the loan amount, include a buffer for additional costs like processing fees and insurance premiums.” A rough estimate of one to two percent of the loan amount over and above your budget for these fees can help prevent surprises.
Negotiate fees when possible:
Lenders often allow room for negotiation, especially for processing fees. For prepayment or foreclosure penalties, check if there’s a grace period after which these fees no longer apply and plan any extra payments around that timeline.
Review the terms of late payment charges:
Being fully aware of what constitutes a “late payment” for your lender can help you stay ahead of penalties. Set up reminders or automate payments to avoid these fees altogether. If penalties do arise, check with the lender about any grace period before additional fees accumulate. Compare different lenders not only for a lower interest rate but also for a transparent fee structure.
“Missing payments or failing to plan for penalties can impact a borrower’s credit score, affecting future loan eligibility and interest rates. Beyond the principal and interest amount, factoring in all potential charges over the loan tenure gives a clearer picture of the true cost of the loan. This approach help borrowers make a more informed decision about whether to prepay or change the loan terms if possible. Consulting with a financial advisor or loan specialist before signing the loan agreement can help borrowers identify potential hidden charges. These professionals can offer personalised strategies for managing home loan fees effectively, especially for first-time homebuyers who are unfamiliar with the process”.
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