When purchasing a home loan, you’ll have to keep in mind the various charges you need to pay. These include registration and franking charges, processing fee, stamp duty, etc. Along with these, individual lenders also sometimes levy specific charges as per their company policies. However, there are some lesser-known charges too, which you might not know about. One of them is CERSAI charges.
If you have availed of a home loan or planning to avail one, it would be best to know about CERSAI charges. First, do you know what CERSAI is? Find out below.
What Is CERSAI?
CERSAI is an abbreviation for The Central Registry of Securitization Asset Reconstruction and Security Interest of India. It is a company formed under Section 8 of the Companies Act 2013, with shareholders like the Government of India, the National Housing Bank and public sector banks. The Government of India alone holds more than 51% share in the company. CERSAI has been entrusted with the responsibility of identifying fraudulent activities related to home loans. Its chief role is to maintain a central registry of all the equitable mortgages, detect, and deter frauds related to security interests.
What Does CERSAI Do?
There have been many cases in the past where borrowers took several loans against one single asset or property from different lenders. CERSAI was formed to detect, check and avoid such illegal practice. Whenever lenders contact CERSAI or visit its website, they can get details about equitable mortgages availed in the country. So, before lenders approve the mortgage loan of a borrower, they can visit the CERSAI website to check if the property in question already has an encumbrance by any lender. If not, it means the property has not been mortgaged earlier. CERSAI safeguards the interest of the lender and helps them make better lending decisions.
What Are Home Loan CERSAI Charges?
Every time a lender gives out a mortgage loan, they should register the mortgage with CERSAI within 30 days with all the details of the security interest. CERSAI records the details of the mortgage, lender, and borrower mortgaging the property. Lenders can also register asset reconstruction and secularization transactions with CERSAI.
Whenever a lender wishes to access this register, he has to pay a fee known as CERSAI charges. The lender then charges this fee from the customer when they avail a home loan. This fee is charged as a processing fee or upfront charge when you apply for a home loan. It is charged irrespective of whether your loan is approved or not. From 1st January 2014, the processing fee and CERSAI charges were clubbed together.
CERSAI was introduced to streamline the home loan process just like the credit information bureau. It saves the lender from fraud. It is also an easy way to keep a record of all the mortgage transactions done by various lenders.
