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Buyers to get 90% loan for property up to Rs 30 lakh

  •   Fri, Oct 09 2015 06:29:43 AM

MUMBAI, Oct 9, DHNS: In a big relief for property buyers, especially those seeking low cost housing, the Reserve Bank of India (RBI) has decided to allow banks to provide home loans for up to 90 per cent value of properties that cost up to Rs 30 lakh.

As per earlier RBI guidelines, home loans for up to 90 per cent of the property value could have been given by banks only for properties of up to Rs 20 lakh. This guideline by the RBI was issued on June 21, 2013.

In a circular issued on Thursday, the RBI said that the loan to value (LTV) for individual housing loans of up to Rs 30 lakh shall be up to 90 per cent. For loans above Rs 30 lakh and up to Rs 75 lakh, the LTV ratio shall be up to 80 per cent. As far as loans above Rs 75 lakh are concerned, the LTV ratio shall be a maximum of 75 per cent, the RBI said.

The RBI had stated in its monetary policy on September 29 that it is looking at revisiting the risk weights and LTV ratios and that it would be coming out with revised norms soon.

The central bank also decided to revise the provisioning or risk weight for loans. As per the new circular, the risk weight for loans of up to Rs 30 lakh, where a buyer avails of loans between 80-90 per cent of the property value shall be 50 per cent, while that for loans where buyer avails of loan up to or equal to 80 per cent shall be 35 per cent.

Analysts believe that such a move will be a big boost for banks as they have been striving for capital. The move is likely to further boost the demand for low cost housing across the country which has already been given a leg up thanks to the Housing for All by 2022 scheme announced by Prime Minister Narendra Modi in June 2015.

*Earlier, 90% loan was allowed for properties worthRs 20 lakh
*For properties up to Rs 75 lakh, 80% loan is allowed
*Above Rs 75 lakh, 75% isallowed
*Move is likely to further boost the demand for low cost housing
  

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Comment on this article

  • Juliet Mascarenhas, Bejai

    Fri, Oct 09 2015

    Paving way to increase suicide.

    DisAgree Agree [4] Reply Report Abuse

  • Suleman Beary, Udupi

    Fri, Oct 09 2015

    When you can rent 50 lakh worth flat for 15 thousand rent in Mangalore why you should buy that flat. Keep 25 lakh in fixed deposit and 25 lakh in term deposit. You can earn 15 thousand every month from fixed interest and stay free from current deposit by paying rent out of that term deposit.
    People having money are not idiots as Govt. thinks.
    What finally you get from the flat?
    Depreciation bring down the flat rate after 10 years. Maintenance charge will be deducted etc.

    DisAgree Agree [8] Reply Report Abuse

  • Santan Mascarenhas, Kinnigoli/Mumbai

    Fri, Oct 09 2015

    Suleman
    I think you may be good in mathematics and statistics, but as far as property is concerned, you look to be a small kid in town.

    Why people pay 50 lakhs today is because after 5 years, same flat may fetch 1 cr. Why NRIs keep their earning in FCNR, though return is less, on the long run when rupee depreciates, they get more than what they might get by NRE deposits. They say, best investment on earth is earth. The property prices have gone up 10 times in the last 15 years. I am of the opinion, Mangalore apartments may not give much return, but still purchasing it by taking loan for 20 years is far better than renting.

    DisAgree Agree [3] Reply Report Abuse

  • Hubert D'souza, Mangalore Dubai

    Fri, Oct 09 2015

    We Don't Want 100% Loan Also. Sinking Ship!!!!

    DisAgree [5] Agree [9] Reply Report Abuse

  • Lawrence, USA

    Fri, Oct 09 2015

    Property prices in Mangalore are too high. It looks like the developers are keeping 150% margin.
    Another draw back is that the banks are not financing with fixed rate interest for 30 years. Currently the rate is 9.5%. In the future, if the interest rate jumps to 15% and the payment will also increase by 50% at which point value of the property will come down as there may no takers.

    The safe bet is to pay 50% down payment and 50% loan that is affordable even if the interest rate go high.

    DisAgree Agree [16] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Fri, Oct 09 2015

    Desperately wooing voters ...

    DisAgree [9] Agree [12] Reply Report Abuse

  • Vinod Climes, Mumbai

    Fri, Oct 09 2015

    Are the banks contesting elections?

    DisAgree [3] Agree [13] Reply Report Abuse

  • Santan Mascarenhas, Kinnigoli/Mumbai

    Fri, Oct 09 2015

    Banks do not contest election. But, they are made to dance according to the whims and fancies by those who contest election.

    DisAgree [5] Agree [13] Reply Report Abuse

  • Aubb, Kuwait

    Fri, Oct 09 2015

    Santan,

    Very true.

    It was Feku and Jhoot Lee, who wanted RBI governor to dance to their tune, even when the time was not right (bowing to fund raising corporate's demands).

    DisAgree [3] Agree [8] Report Abuse

  • vivek, Hirebile/ Abu Dhabi

    Fri, Oct 09 2015

    recession Calling!!!.....all decisions to please Builders...Loan amount increase Ultimately Property value increase...whats the Point then..Buyer is looser at the end....Modi tu Mahan hooo....

    DisAgree [9] Agree [17] Reply Report Abuse

  • santhosh, mangaluru

    Fri, Oct 09 2015

    This kind of hatred towards Modi is all we want, so that we can still be developing country even after another 100 years

    DisAgree [19] Agree [7] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Fri, Oct 09 2015

    Santosh, under Modi only Ramdev, Ambani & Adani will develop ...

    DisAgree [7] Agree [20] Reply Report Abuse

  • vivek, Hirebile/ Abu Dhabi

    Fri, Oct 09 2015

    santhosh, mangaluru.....Turn the pages of history...pleasing Industrialist and Builders ...will keep Poor more poorer....2008 world recession because of such Property Buyer encouraging decision..your Mind occupied with Modi how you will understand....

    DisAgree [6] Agree [19] Reply Report Abuse

  • Santan Mascarenhas, Kinnigoli/Mumbai

    Fri, Oct 09 2015

    Good move by RBI. Earlier, 90% loan was already there for properties up to 20 lakhs, which is now increased to 30 lakhs.

    However, with other conditions, how far it will help, one cannot say. Presently, for a SBI loan of 19.09 lakh, the income of the person has to be Rs 5 lakhs per annum if he applies for 20 year EMI. As per SBI, EMI comes to 17,857 per month. How many salaried persons are there in India getting 5 lakhs and how many can pay this EMI ? Also, if the age is 45 or 50 of salaried applicant, the loan is granted only for 15 and 10 years period respectively, since at 60 one is expected to retire.

    with so high prices of the properties, it is still a distant dream for common man. However, for young people who are 30 and below, they an avail a loan for 30 years

    DisAgree Agree [14] Reply Report Abuse


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