Franking and Stamping_ What’s the Difference

1. Understanding Franking Charges on Home Loans: A Complete Guide When it comes to home loans, the term "franking charges" often appears in the documentation process. For many borrowers, this might seem like a complex or unfamiliar concept. However, understanding franking charges is crucial, as they play an essential role in validating your home loan agreement and ensuring its legal compliance. In this blog, we’ll demystify what franking charges are, why they are necessary, and how they impact your home loan process. What Are Franking Charges? Franking charges refer to the fee paid for stamping a legal document, such as a home loan agreement, to certify that the required stamp duty has been paid. Franking is a method used to mark the document with an official stamp or seal, indicating its legal validity. This process is carried out by authorized banks or agencies that have the necessary permissions from the government to collect stamp duty. Once the document is franked, it becomes a legally binding agreement. Why Are Franking Charges Important for Home Loans? 1. Legal Validation: Franking certifies that the stamp duty on your loan agreement has been paid, making it a legally recognized document.

2. 2. Avoiding Legal Disputes: In case of disputes or disagreements, a franked agreement holds more weight in legal proceedings. 3. Compliance with State Laws: Stamp duty and franking requirements vary across states. Paying franking charges ensures compliance with local regulations. How Are Franking Charges Calculated? The franking charges are typically a percentage of the total loan amount mentioned in the agreement. While the exact rate varies across states in India, it usually ranges between 0.1% and 0.2% of the loan amount. For instance: ● If your home loan amount is ₹50,00,000 and the franking charge rate is 0.1%, you would need to pay ₹5,000 as franking charges. It’s important to note that this fee is separate from other charges like processing fees, administrative fees, and legal fees that may be levied by the lender. When Do You Pay Franking Charges? Franking charges are generally paid during the execution of the loan agreement. The borrower needs to submit the agreement to an authorized bank or agency, where the document is stamped or franked after the payment of the required charges. Key Differences Between Franking and Other Stamp Duty Methods Aspect Franking Stamp Paper Purchase Method The document is stamped using a franking machine. Physical stamp paper is purchased and attached to the document. Convenienc e More modern and efficient process. Traditional and often time-consuming. Availability Limited to authorized banks and agents. Stamp papers are widely available through licensed vendors. Tips to Reduce Franking Costs

3. While franking charges are mandatory, here are a few tips to manage or reduce the overall costs: 1. Compare Lenders: Different lenders may have varying policies regarding franking charges. Choose a lender that aligns with your budget. 2. Check State Rates: Since franking charges vary by state, understanding your local rates can help you plan better. 3. Negotiate with the Lender: In some cases, lenders may agree to bear a portion of the franking charges as part of your loan deal. How Bravima Solution Simplifies the Home Loan Process At Bravima Solution, we specialize in providing home loans through trusted partnerships with NBFCs. We guide our customers through every step of the loan process, including documentation and franking requirements. Here’s how we make it easier for you: ● Expert Guidance: Our team helps you understand franking charges and other associated costs. Hassle-Free Documentation: We ensure that your loan agreement complies with all legal and regulatory requirements. Competitive Loan Options: By collaborating with leading NBFCs, we offer attractive home loan deals with transparent costs. ● ●