The Reserve Bank of India (RBI) has now issued new home loan guidelines after a long phase which aims to make housing finance more accessible and cost-effective for borrowers
Revisions on LTV ratio:
The LTV ratio states how much of a property’s value can be financed by way of a loan. The new LTV ratios:
90% for properties valued below ₹30 lakh
80% for properties valued between ₹30 lakh and ₹75 lakh
75% for properties valued above ₹75 lakh.
Such a change allows borrowing less upfront, hence making housing finance easier
Prepayment and Foreclosure Charges:
Encouraging early repayment and giving flexibility:
Floating Interest Rate Loans: No prepayment or foreclosure charge
Fixed Interest Rate Loans: Reduced prepayment charge of 3% from the previous 5% of the outstanding amount.
Benefit borrowers by allowing cost-less prepayment of floating rate loans and reduced charges for fixed rate loans.
GRIHA SHAKT
Switch Home Loan Balance Transfer:
Customers can now transfer their home loan from that lender to another lender having a better deal transferred free of cost driven especially towards floating interest rate loans.
HDFC BAN
Documentation and Loan Closure Procedures:
Original property documents with banks must be returned within 30 days of loan closure, according to the RBI. Any such delay will incur penalty of ₹5,000 for every day. Moreover, there is also the added convenience of choosing the branch from where borrowers wish to collect their documents.
THE LEGAL SHOT
Interest Rate Transparency Lenders:
overall, borrowers will know the cost of their loans through interest rate disclosure and fees.
Evaluating the Borrower’s Debt Serviceability: Banks have undertaken thorough evaluations of the income and debt serviceability of the borrower before sanctioning loans-the very virtues of responsible lending with reduced risk of default.
These changes will increase the transparency in lending, lower costs and improve flexibility for home loan borrowers in India. Any borrower willing to take the proposed changes is advised to consult his or her financial institution to understand how it may affect their individual loan agreement with respect to these new guidelines.