The moment the home loan is sanctioned the borrower is elated as if he got a bumper prize but the truth is that he has entered into an agreement of longstanding labour.

Majority of the financial institutions or the managers at the banks or the banks itself will have an INSURANCE POLICY attached to the HOME LOANS.

Some banks/financial institutions add a single premium to the loan amount and the unsuspecting, ignorant and dumb buyers sign the home loan agreement, which includes the insurance premium not only on the life of the borrower but also for the property.

The insurance premium varies on the amount borrowed and the age of the borrower and in general, the premium on an average is around Rs.50,000/- for Rs.25 to 50 lakhs.

Even though the borrower has covered his life with insurance from some other company, the lending institution/bank will provide insurance for the borrower as well as the property, so as to ensure that the bank money is NOT LOST.

The insurance premium is added to the home loan and the borrower pays interest on this for many numbers of years.

This premium along with other charges, taxes, clubhouse, deposits and statutory duties forms around 20% to 25%.  The borrower pays interest on these additional amounts.  It is a lifetime punishment for the borrower.