The 20s are an interesting age where we can live with our parents or with friends on rent. However, as we grow up and get married, we think of having our own house. Investing in a house is in such a case a wise option because we do not have to keep getting reminders from any landlord at the beginning of every month. We also save money and the value of the house keeps increasing with time.
In order to make the process of availing home loans more friendly or to avail home loan tax exemption, RBI has mandated a set of guidelines which every individual must know. Here are a few of them -
Increase in Loan to Value Ratio
Loan to Value Ratio or RTV refers to the loan amount which is offered against the total value of the property. This is now been increased from 80% to 90% now for loans less than Rs. 30 lakh. This means that if the value of the property you are purchasing is Rs. 30 lakh, you will get a loan of Rs. 27 lakh. For loans between Rs. 30 lakh to 75 lakh, the LTV is 80%, while for loans above Rs. 75 lakh, the LTV is 75%.
No Prepayment Charges
During the course of your loan repayment, if you suddenly get some money, you can use this to prepay some of the loan which would bring down the tenor and the EMIs. As this was a loss for the lenders, the started charging a prepayment fee. However, prepayment charges have now been discontinued with floating rate of interest according to RBI guidelines for home loan.
Refinance Home Loans
As prepayment charges have now been waived, the balance of the home loan can be transferred to some other lender with better terms and conditions and lesser rate of interest.
There are a number of financial institutions with good rates of interest and allow the option to transfer the balance of their home loans. To know more, visit the website of such financial institutions.
Read more at: Why You Need to Know About the RBI Guidelines for Home Loans
