Change is inevitable in the real estate industry and this time it is for the
good! The NHB (National Housing Bank) is considering a proposal that seeks to
allow lenders to give up to 90% of the property value as home loan! This can in
fact lure many eyes to this sector which is long waiting for rejuvenation. The
proposal is for above INR 20 lakh loans that carry mortgage guarantee cover.
The present scenario offers a maximum of 80% of the
property value as home loans. NHB’s effort in seeking to increase the cap to
90% is expected to boost the industry morale. LTV (loan to value) ratio at 90%
means that a home loan borrower can avail a loan of INR 90 lakh against a
property value of INR 1 Crore.
The regulator for HFCs (Housing Finance Companies), NHB’s
chairman cum managing director Mr.RV Verma says “We will discuss the matter of
increasing LTV ratio for loans that carry mortgage guarantee cover from
companies registered with the RBI.” HFCs enter into a contract with mortgage
guarantee companies at the time of loan origination. The measure not only helps
mitigate default risk but also proves financially viable when Home Loan
Portfolios are securitized.
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