Almost every year, RBI puts out guidelines that every home loan provider and lending institutions must mandatorily follow. This is done to maintain uniformity amongst different providers and act in the customers’ best interests. In 2019, RBI has made changes that make home loans easier for borrowers to pay. These guidelines include:
- There are to be no pre-payment charges across all banks and lenders in the case of floating interest loans.
- External benchmarks for interest rates have been established to which all floating rate loans have to be linked. The 3 external benchmarks include RBI’s policy repo rate, the Government’s 3-month and 6-month treasury bill yields, and any other benchmark rates that have been or will be published by Financial Benchmarks India Private Limited.
- Borrowers who have already taken out home loans can switch to these benchmark-associated loans at no additional cost.
- Borrowers can get funding of up to 90% of the property value through a home loan if this 90% comes out to be less than or equal to Rs. 30 lakhs.
- Borrowers can get funding of up to 80% of the property value through a home loan if this 80% comes out to be more than Rs. 30 lakhs but up to Rs. 75 lakhs. For all other loans, the maximum funding stands at 75% of the property value.
- Borrowers are not mandated to purchase insurance from home loan lenders.
- Registration charges, stamp duty, and other charges related to documentation are not to be included when the loan-to-value ratio is being calculated.
- There will be no foreclosure charges on home loans.
- Up to Rs. 35 lakhs, loans in metro cities will be regarded as priority sector loans.
- If a borrower switches his loan to one linked with the external benchmark, the interest rate they incur will be the same as that of a new loan.
- Banks have to adhere to a uniform external benchmark within one particular loan category.
- The interest rate of home loans has to be reset at least every 3 months according to the external benchmark.
- The credit risk premium can be changed only in the case of a borrower’s credit assessment undergoing a noticeable change. The flexibility in terms of this change is specified in the loan contract.
- Banks and lenders can decide the spread over the external benchmark independently, and this spread can be altered once in every 3 years.
With Tata Capital’s home loans, you never have to worry about security, reliability, and compliance. Tata Capital housing finance has the most flexible home loan eligibility criteria and repayment methods. The home loan interest rates start at a low 9.25% and the amount goes from Rs. 2 lakhs right up to Rs. 5 crores. With a Tata Capital housing loan, you never have to wait to own your dream house – apply for one today!