Home Loan upto 90% of the value of the property

NHB (Nation­al Hous­ing Board, a 100% Sub­sidiary of RBI & Reg­u­la­tor of Hous­ing Finance Com­pa­nies in India) has allowed HFC’s to lend upto 90% of the val­ue of the prop­er­ty in case of Loan above Rs. 20 lakhs. You may call it as a Diwali Gift to Home loan Bor­row­ers from the home loan reg­u­la­tor. NHB issued a noti­fi­ca­tion on 15.10.2014 announc­ing max­i­mum LTV (Loan to prop­er­ty Val­ue) could be 90%, which was ear­li­er 80%. Pri­or to this lat­est reg­u­la­to­ry change, LTV ratio was lim­it­ed to 90 per cent for loans up to ₹ 20 lakh, 80 per cent for loans up to ₹ 75 lakh and 75 per cent for loans over ₹ 75 lakh.

Home loan bor­row­ers can now bring in low­er mounts towards their ini­tial con­tri­bu­tion for avail­ing them­selves of hous­ing loans from hous­ing finance com­pa­nies (HFCs).

This facil­i­ty of low­er upfront con­tri­bu­tion (towards home equi­ty) will be avail­able in cas­es where the home loans availed from HFCs is above ₹ 20 lakh. Also, such loans should be sup­port­ed by a mort­gage guar­an­tee cov­er issued by a reg­is­tered mort­gage guar­an­tee com­pa­ny. In India, the total HFCs’ port­fo­lio of retail hous­ing loans stood at about ₹ 3 lakh crore. About 55 per cent of this is loans above ₹ 20 lakh.

Sim­ply put, bor­row­ers look­ing to avail them­selves of hous­ing loans above ₹ 20 lakh need to bring only 10 per cent of the loan upfront and the bal­ance 90 per cent could be fund­ed by the hous­ing finance company.

Ver­ma, chair­man of  NHB, also said that the Reserve Bank of India (RBI) should allow a sim­i­lar dis­pen­sa­tion for home loans extend­ed by banks.

For India Mort­gage Guar­an­tee Cor­po­ra­tion, the only reg­is­tered mort­gage guar­an­tee com­pa­ny till date in India, the move will help it share part of the HFC’s risk on high LTV hous­ing loans.

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