Home loans have just started their move towards getting costlier. Directives let out by banking regulator, Reserve Bank of India have made margin money of atleast 20% a mandatory process for any home loan to get sanctioned. The margin money earlier stood somewhere between 10 to 15%.
A slight concession has however been made for home loans upto Rs 20 lakhs where the loan can be availed by paying 10% of the total property value as margin money.
RBI has also mandated banks to increase their provisioning on teaser loans making many banks to stop this special home loan scheme. The central bank however made a concession saying that once the teaser loan period of intial 2-3 years ends and the customer falls into the regular rate structure, the provisioning for banks would also reduce accordingly.
"At present, there is no regulatory ceiling on the LTV (loan-to-value ) ratio in respect of banks' housing loan exposures. In order to prevent excessive leveraging , the LTV ratio in respect of housing loans hereafter should not exceed 80%," RBI said in a notification. "However , for small value housing loans, i.e. housing loans up to Rs 20 lakh (which get categorized as priority sector advances ), it has been decided that the LTV ratio should not exceed 90%," the notification added.