As the demand for home loans has gone up in last few years, a lot of developments have taken place in the sector. The Reserve Bank of India has now instructed banks to not to take mortgage guarantee cover for house loans where Loan-to-value (LTV) ratio is more than 80%.
The 80% mark has been set for the housing loans above Rs. 20 lac. For loans below 20 lac the maximum LTV value can be 90%.
LTV is the percentage of amount that a lender provides to a borrower to the amount that the borrower himself needs to bring. From now on a borrower will be required to arrange at least 20% of the amount on his own for non-priority sector advances.