Latest RBI Guidelines For Home Loans In 2023
The Reserve Bank of India is the apex governing body that devises and updates the rules of financial institutions in our country. These updates are based on the country’s economic growth, inflation, supply & demand, etc. The Reserve Bank of India, in their latest update about Home Loans, made the borrower’s life easy.
Repo rate can be defined as the interest rate at which the RBI lends money to financial institutions. The country’s inflation can be influenced by the RBI’s repo rate. This time, RBI intended to stabilize the country’s economy by keeping the repo rate unchanged at 6.5%. The unchanged repo rate will keep the home loan interest rates stable.
Loan To Value Ratio
The term Loan To Value can be defined as the ratio of the loan to the value of the property that is to be purchased. To encourage more people to buy homes, RBI has increased the LTV ratio to 90% for loans up to 30 Lakhs and 75% for loans above 75 Lakhs. Higher the Loan To Value ratio, the easier it will be for the borrower to purchase the property through home loans.
Prepayment is when a borrower pays off their remaining loan amount before the tenure period. Prepayment often comes with a prepayment penalty. However, the RBI has waived off the prepayment charges for floating interest rate loans and capped them at 3% for fixed interest rate loans. Earlier lenders used to ask for up to 5% of the loan amount.
Balance Transfer Facility
Balance transfer is a facility where a borrower can switch their lender midway through their tenure for a lesser interest rate. Here, the existing lender closes the loan and transfers it to the new lender. Earlier, a penalty had to be paid from the borrower’s side while balance transferring their loan. However, RBI in their new guidelines waived off the penalty charges for balance transfer.
From all these guidelines, it is clear that the RBI made this for the benefit of the borrowers as it gives more flexibility. It is big-time borrowers make themselves aware of these newly updated guidelines. If you’re looking for a reliable financial partner to fund your housing dreams, Cholamandalam Finance can be a perfect option for you. Just give a missed call to 07874782782 or walk into your nearest branch to apply for Chola Home Loans.