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Buying a home is a very expensive business. It takes several lakhs, if not a few crores to become a homeowner in today’s day and age. As if the investment of a home isn’t already expensive, most buyers must rely on home loans to make the purchase. Apart from the obvious fact that one would be repaying the principal loan amount with a fixed or floating interest rate, there are also several other, lesser-known charges associated with home loans. Some of these include the loan repayment mode chosen by the borrower, Franking or stamp duty charges, overdue charges on EMI and EMI bounce charges. Another unknown charge levied on home loans is the CERSAI charge. Let’s find out more about it.
The Central Registry of Securitisation Asset Reconstruction and Security Interest of India, or CERSAI Charges is a term used in the context of home loans. CERSAI is basically a company licensed by the Government of India, under Section 8 of the Companies Act of 2013. Under this Act, the Central Government of India and select public sector banks as well as National Housing Banks serve as 51% shareholders in CERSAI.
CERSAI was created in order to check and identify any fraudulent activities, especially in the case of home loans against property or mortgage home loans i.e. several loans taken by pledging the same asset. The main purpose of the creation of CERSAI was to deter all the illegal practices of taking out multiple loans against the same asset or property from different lenders.
The government started levying CERSAI charges for home loans so as to protect the interests of the lenders while providing loans against property. It enables lenders to conduct a check on CERCAI’s official website to determine whether a property, against which one is seeking a loan, is not encumbered by security interest created by another lender.
As per CERCAI regulations, lenders need to mandatorily register details of all security interests they create with CERSAI by visiting the website within a period of 30 days of creating security interests. As such, the home loan borrower must pay a small charge, known as the CERSAI charge while he takes out the loan.
CERSAI charges for home loans are prescribed by CERSAI and the borrower must pay a fixed fee of Rs 50 for a loan amount amounting to Rs 500,000. If the loan amount exceeds Rs 500,000 the borrower must pay a fee of Rs 100 towards original filing and/or modification as CERSAI charge.
As mentioned above, the Government of India launched CERSAI with the main objective of eliminating fraudulent and dubious activities related to taking out loans by pledging the same asset as mortgage to various lenders at the same time. The company was also launched so as to maintain a single, centralized registry of all equitable mortgages. The CERSAI registry essentially contains all the relevant and necessary information regarding mortgage loans taken out on a single property. Additionally, lenders can also find information about the party sanctioning the loan against the property in question as well as all the necessary information about the borrower.
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