If you are disappointed that the Reserve Bank has not given any relief on the EMI of home loan by not making any change in the interest rates, then it is also right to be disappointed to an extent.
New Delhi: If you are disappointed that the Reserve Bank has not given any relief on the EMI of home loan by not making any change in the interest rates, then it is right for you to be disappointed to an extent. But we are going to tell you about the step of the Reserve Bank that even if the repo rate is not cut, the home loan can be cheaper.
In fact, by 31 March 2022, the Reserve Bank has linked the risk weight of all new loans to LTV i.e. Loan to value. You may take a little technical understanding, but it is a very easy thing. Treat it as
What is the way to loan with risk weight
The risk weight of consumer loans such as home loans, car loans, etc. are decided in two ways. Risk weight means that the bank analyzes how much the risk is in giving a particular loan, according to which they provision the loan. These are the two ways
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First, the size of the loan, that is, how much loan is being given
Second, loan to value – how much down payment the loanee has given to the total loan and how much money the bank has financed. This is its ratio.
Now the RBI has said that the risk weight will depend only on the loan to value and not on the size of the loan. Apart from this, non-banking finance companies (NBFCs), housing finance companies will be able to finance loans in collaboration with banks, earlier only a few select NBFCs were allowed this.
Benefits of linking risk weightage to LTV
Linking the risk weight to LTV will increase the scope of loan, banks will be able to give maximum loan at less risk. The provisioning of banks for loans will also be less. Along with this, big housing loans can be given.
Now understand cheap loan connection with LTV
Suppose LTV is up to 80%, then the risk weight will be 35%. If 80 to 90 percent, then the risk weight will be 50 percent. This means that if you want a cheap home loan, then you will have to keep the LTV to a minimum, for which you will have to make a down payment as much as possible. That is, the higher the down payment, the lower the risk weight and then the easier way will be to get a cheaper loan.
New LTV Risk Weight Link
35% risk weightage will be applicable for LTV up to 80%
LTV up to 81% -90% then 50% risk weightage will be applicable
What is the risk weight LTV link now
Right now up to 90% LTV for home loans up to Rs 30 lakhs
LTV up to 80% now on home loans up to Rs 30-75 lakh
Up to 75% LTV on home loans above Rs 75 lakhs
So it is clear that home loans will not be cheaper just by reducing interest rates, there is no need to be disappointed by this. Reserve Bank can also take home loan cheaply through this other route.
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