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New RBI Policy for Home Loans

Published on Thursday, March 19, 2015
In a move to reduce the burden of buyers of residential property, RBI eases the housing loan guidelines on house worth less than Rs.10 lacs

Loan to Value (LTV)ratio = Maximum limit on loan /Value of property × 100
  • Banks can offer home loan up to 85% of the value of house. Value to calculate LTV doesn't include stamp duty, documentation, regisration adn administerative expenses and service tax on it.
  • So if the value of house is Rs.10 lac, banks can offer loan of up to Rs.8.5 lac. There is stamp duty registeration, administerative expenses and service tax which can be 7-10% of the property. So contributioon of buyer increases from Rs. 1.5 to Rs.2.5 lac 
  • Last week RBI directly that the banks that while calculating LTV on house valued up to Rs.10 lacs, Stamp dty, registeration expenses, administerative expenses and documentation expenses should be considered. So as mentioned in the above example for a house valued at Rs.10 lac, buyer need to contribute just Rs.1.5 lac. He will get remaining money as loan from bank.
  • Banks provide house loan in line with stage of contruction. In case of under-constructed houses and planned projects, no loan is provided. RBI laid guidelines that in case of Government sponsored projects, banks may disburse loan as per payment schedule laid by competent authorities.
  • Principal amount and interest paid on housing loan is exempted from Income tax under section 80c with a maximum limit of Rs.1.5 per annum. 

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