Wednesday 3 June 2015

GOVERNMENT WORKING ON A TWO-PRONGED STRATEGY FOR ENHANCING ACCESS TO HOUSING FINANCE


Recently at a conference, Union Housing Minister said, that the Government is working on a two-pronged strategy for enhancing access to housing finance in general and ensuring credit at lower rates of interest to the poor to ensure housing for all.

In the process, the Government is implementing measures to provide affordable homes to needy. In a recent attempt, to promote home loans in the under-Rs.10 lakh category, the Reserve Bank of India liberalized housing loan norms. Accordingly, the RBI allowed Banks to include stamp duty, registration and other documentation charges to the cost of the house/dwelling unit, whose cost does not exceed Rs.10.00 lakhs, for the purpose of calculating the Loan-to-Value (LTV) ratio.

This measure is expected to give a fillip to affordable housing and achieve the Government’s target of ‘Housing for All by 2022’. The Minister further announced that, the Union Cabinet has approved construction of 2 crore houses for the urban poor in all the 4041 statutory towns and cities of the Country.   
  
As per the extant norms, Banks can give small value home loans up to 90 per cent of the value of a house property. For example, to buy a house costing Rs.10.00 lakhs, a Bank can give a loan up to Rs.9.00 lakhs. Henceforth, the loan of Rs.9.00 lakhs home loan will cover the expenses incurred towards stamp duty, registration and other documentation charges.This move was initiated following a decline in home loans in this category and to promote affordable housing for poor.


This relaxation in housing loan norms for the affordable housing will lessen the burden on those in the Economically Weaker Sections (EWSs) / Low Income Groups (LIGs) who want to buy/construct a house.

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