Getting your home loan approved can feel like crossing the finish line in a long, exhausting marathon. After all, you’ve survived the document checks, endless verification calls, and nerve-wracking credit assessments. You finally hear the words — “Your loan has been sanctioned.”
But that’s not the end of the story. In fact, for many borrowers, it’s just the beginning of a new set of surprises — hidden costs, sales traps, and missed benefits.
Sujit Bangar, founder of TaxBuddy.com, recently highlighted six truths about home loans that most banks and their relationship managers (RMs) conveniently skip mentioning. These are insights that could save you lakhs of rupees and months of stress.
Let’s uncover these truths one by one — in plain English.
1. Your “processing fee” isn’t the full picture — demand a detailed cost sheet
When banks advertise low interest rates, they often gloss over the real cost of your loan.
Once your loan is approved, you may find multiple add-ons in your sanction letter:
-
Processing or administrative fee
-
Legal verification and technical valuation fees
-
Documentation charges
-
GST or service charges
These are rarely disclosed upfront, leaving you little room to negotiate later.
💡 What you can do
Under RBI’s Fair Practice Code, every bank must give you a complete cost breakup before you sign your loan agreement. You have the right to ask for it.
Even small hidden charges — ₹5,000 here, ₹10,000 there — can add up to a huge sum. So, insist on seeing a written cost sheet before you accept the offer.
If your RM avoids giving it, that’s a red flag.
2. That “mandatory insurance” isn’t mandatory at all
A few days before disbursal, your RM might suddenly say:
“Sir, you must take this insurance policy to protect your home loan.”
Sounds important, right? But here’s the truth — it’s not compulsory.
Banks often push single-premium life or home insurance plans linked to your loan. These are high-value products, often costing tens of thousands of rupees. Sometimes, the premium is simply added to your loan amount, increasing your debt and interest burden.
🚫 The real deal
-
You are not obligated to buy insurance from your bank.
-
You are free to choose any insurer or skip it altogether if you already have sufficient coverage.
-
RBI has explicitly stated that insurance cannot be tied to loan approval.
⚠️ The tax trap
RMs often pitch it as a “tax-saving option.” But as Sujit Bangar explains, most borrowers already hit the ₹1.5 lakh limit under Section 80C through home loan repayments.
And if you’ve switched to the new tax regime, these deductions don’t even apply.
✅ Smart move
Apply to multiple banks simultaneously. Competing offers make it harder for any one bank to corner you into buying extra products.
3. Joint ownership = double tax savings (legally!)
Here’s a secret the smartest borrowers use:
Co-owning your home with a spouse or family member can double your tax benefits.
If both names appear on the property deed and the loan, each co-owner can claim:
-
₹1.5 lakh deduction on principal (Section 80C), and
-
₹2 lakh deduction on interest (Section 24).
That’s up to ₹7 lakh in total deductions for two co-owners — completely legal and valid.
🧮 Example
Suppose you and your spouse buy a ₹70 lakh flat and pay ₹6 lakh in annual interest plus ₹3 lakh in principal repayment. Both of you can claim deductions individually, reducing your taxable income significantly.
🏦 Bonus tip
Even if one partner earns less, joint ownership is beneficial in the long run — for asset security, tax planning, and loan repayment flexibility.
4. Women buyers pay less stamp duty — use that to your advantage
Here’s a clever trick many families miss:
Several Indian states offer discounted stamp duty rates for women homebuyers.
For instance:
-
In Delhi, women pay 4% vs 6% for men.
-
In Haryana, it’s 5% for women and 7% for men.
-
Other states like Rajasthan, Punjab, and Uttar Pradesh have similar benefits.
On a ₹1 crore property, that’s a saving of ₹1.5–2 lakh instantly.
⚠️ But think ahead
If the property is registered solely in a woman’s name, ownership and inheritance rights will also belong to her. So make sure this aligns with your family’s long-term financial plan.
A safer option is to register the property jointly — ensuring both partners share benefits and legal rights.
5. Always check the builder and project on the RERA portal
Buying property without checking its RERA registration is like boarding a flight without knowing the destination.
Every state has a RERA (Real Estate Regulatory Authority) website where all registered projects and builders are listed.
🧾 Why this matters
The RERA portal reveals crucial information like:
-
Project status and approvals
-
Builder’s past projects and delivery record
-
Pending litigations or complaints
-
Timeline for possession
🖥️ How to check
-
Visit your state’s RERA site (e.g., maharera.mahaonline.gov.in for Maharashtra).
-
Search by project or developer name.
-
Review all documents uploaded by the builder.
If the project isn’t registered, that’s a huge red flag.
💬 Bangar’s advice
“RERA registration isn’t a formality. It’s your shield against fraud and delay.”
6. Never take possession without an Occupancy Certificate (OC)
You’ve waited for months, maybe years. The builder finally calls:
“Congratulations! Your flat is ready — come collect your keys.”
But before you get carried away, ask the most important question:
“Has the building received its Occupancy Certificate?”
🧱 What is an OC?
An Occupancy Certificate is issued by local municipal authorities after verifying that a building:
-
Meets all safety and construction norms,
-
Follows the approved plan, and
-
Is legally fit for occupation.
Without it, living in the building is technically illegal.
⚠️ What happens if you move in without OC
-
You could face eviction or penalties from civic authorities.
-
Utility connections (water, power, gas) may be delayed or denied.
-
Future resale or loan against property may become impossible.
💡 What to do
If your builder delays the OC, refuse possession and raise a complaint on the RERA portal.
Keep all communication records — they’re proof of your compliance and can help you legally.
Bangar sums it up perfectly:
“No OC, no keys.”
Why your bank won’t tell you any of this
So, why do banks and RMs stay silent about these crucial details?
Because, like any business, their primary goal is sales. The more products they sell — loans, insurance, credit cards — the higher their targets and incentives.
That’s why RMs often present half-truths like:
-
“Everyone takes this policy, sir.”
-
“Without this, your file won’t move.”
-
“These are standard charges.”
They’re not lying outright — they’re just not telling you everything.
🔍 The RBI’s rulebook says otherwise
The RBI Fair Practices Code clearly states that banks must:
-
Disclose all charges transparently,
-
Avoid coercive sales tactics, and
-
Provide written information about optional products.
If you ever feel misled, you can file a complaint with the bank’s grievance officer or directly with the RBI Ombudsman.
6 More Pro Tips for Smart Borrowers
Beyond Sujit Bangar’s six truths, here are six extra strategies to make your home loan journey smooth and cost-efficient:
-
Compare “effective interest rates” — not just the advertised rate.
-
Check how the bank calculates interest (daily vs. monthly reducing).
-
A 0.25% difference can mean lakhs over 20 years.
-
-
Avoid overborrowing.
-
Just because the bank offers ₹80 lakh doesn’t mean you should take it.
-
Stick to what you can repay even if rates rise.
-
-
Maintain a good credit score (750+).
-
A high score can reduce your rate by up to 0.5%, saving huge interest over time.
-
-
Review and refinance every 2–3 years.
-
If another bank offers a lower rate, consider switching after evaluating transfer costs.
-
-
Prepay strategically.
-
Even one extra EMI per year can shave years off your tenure and save massive interest.
-
-
Keep all loan documents safe.
-
Never rely solely on your bank’s digital copies. Always store hard copies of agreements and sanction letters.
-
The Bigger Picture: Empower Yourself, Don’t Outsource Awareness
A home loan is often the biggest financial decision of your life.
Banks will help you borrow — but it’s your job to borrow smartly.
The fine print, the optional products, the tax nuances — none of these will be explained unless you ask. And once you sign the agreement, it’s hard to undo mistakes.
So, before you celebrate your loan sanction:
-
Ask every question,
-
Read every clause, and
-
Get every cost in writing.
As Sujit Bangar rightly puts it:
“Your RM won’t tell you all this — but you must ask.”
Final Thought
Buying a home is emotional — but home loans are purely financial.
Don’t let excitement cloud your judgment.
Be informed, be assertive, and never sign in a hurry.
Because in the world of home loans, what you don’t know can — and will — cost you dearly.
Comments
Post a Comment