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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