There is no doubt that the Indian Government wants its citizens to have a home for themselves. For this, the Government along with the Reserve Bank of India have come up with various schemes.
Although some of these schemes have not been as successful as others, they have yet shown positive effects. Apart from this, the RBI continuously upgrades its home loan guidelines and rules.
The reason for this upgradation is to make it easy for everyone to have their own property someday. Whether we talk about the affordable home scheme or the priority sector ones; there is something for everyone when it comes to RBI guidelines for home loan.
In this post, we are going to talk about four such basic RBI guidelines and rules for home loans.
In case you are looking to borrow funds for creating your own home, then this is a write-up that you must read.
1. No Prepayment Charges
Earlier on when borrowers wanted to repay their loans in advance, there were certain penalty charges deducted. It meant that even though you are preparing the loan amount, you still had to bear expenses. This situation was considered a major setback by many borrowers. Considering this, the RBI decided to abolish any charges related to the prepayment of loans. The same has been kept when it comes to the house loan concept. According to this, even if you prepare your home loan, you will not have to pay any penalty charges whatsoever.
2. Increased LTV ratio
Generally, when you go to borrow a home loan, there are different percentages of the amount that you can receive. It depends on the financing agency that you are visiting, along with the value of the property. However, under the new rules and guidelines created by RBI, you can now receive up to 90% of the property value as home loan. This RBI home loan guideline has made it easier for people to reduce their financial pressure when it comes to buying or building a home.
3. Home Loan Insurance
You must have visited a bank to get a home loan and may know how the lenders force you to buy a home loan insurance as well. This is usually a marketing technique used by banks and financing agencies. It helps them to increase their commission on this service. But with the latest development in home loan rules, it is clear that it’s not important for borrowers to purchase a home loan insurance. Even if the client wants to secure their home loan repayment with insurance; it is on them to decide the agency and tenor.
4. Priority Sector Lending
Priority Sectors are those zones for which you can get loans easily. A few years back the maximum loan amount for a Priority Sector was Rs.28 lakhs. But during the last year's house loan guideline up-gradation, the limit has been set at Rs.35 lakhs.
This means that borrowers will be able to receive a higher limit when it comes to home loans for Priority Sectors. You can choose MCLR rate when applying loan for better interest rate. But there is a limit when it comes to the total value of the home. For metro cities, the property cannot cost more than Rs.45 lakhs. Whereas in other towns, it should not be above Rs.35 lakhs.