Banks are ready to give more home loans to customers


New Delhi: Home loan borrowers are now getting more chances of getting more loan amount. According to a report in Economic Times, this is possible because banks now want to include stamp duty and other registration charges in the project cost. For this, they are preparing to get its approval from the Reserve Bank of India (RBI). People aware of the matter say that the banks have approached the RBI after internal consultations at a meeting held last month. A banker said on the condition of anonymity, “We are hoping that RBI will take an appropriate decision in this matter and this will increase the loan amount for home loan seekers. Since in this type of loan, mortgage has to be given against the loan, so there is not much risk in it.

If the proposal is approved by the Reserve Bank, borrowers eligible for a loan of up to ₹75 lakh as against ₹60 lakh under the existing loan for a project costing ₹1 crore including stamp duty and registration charges of ₹20 lakh will be. This amount is determined by the loan to value (LTV) ratio. As per the current guidelines, the home loan LTV ratio is 75-90% of the value of the property. If the loan amount is more than ₹75 lakh, then the LTV ratio cannot exceed 75%. About a decade ago, the Reserve Bank directed banks not to include stamp duty or registration charges in the total value of the house. Its purpose was to maintain the effectiveness of loan-to-value rules.

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circular of rbi

The RBI circular of February 2012 states that adding such charges shows the recoverable amount of the property inflated while stamp duty, registration and other documentation charges cannot be recovered. Due to this the fixed margin gets reduced. Another banker said, “It is for the RBI to take the final call. If he thinks it appropriate, he can also set a limit for it. For example, stamp duty and other administration charges should not exceed 10% of the project cost.

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