Want to Buy a New Home? Here are 4 New RBI Rules for Home Loans in 2023

A home loan is money that a person loans from a financial organisation, such as a property lending business, to build a home, modify an existing home, or expand it. The funds are borrowed at a specific interest rate and returned in equal monthly instalments (EMIs) within a predetermined time frame.

Benefits of Availing of a Home Loan

Home loans have become a necessity for families nowadays because of the following benefits it has to offer:

• Enough time to the repayment of the loans

The government of India provides enough time frame for the repayment of the loans from 25 to 30 years with a minimum rate of interest. With this, you can have your dream home in a preferable place that you are demanding.

• Variable rate of interest

Different types of private and public sector loans offer home loans at a variable rate of interest. A borrower can choose the bank of their own will in which he or she is finding the best benefits.

• Fixed amount to be paid

The rate of interest in which you have taken the loan will remain fixed irrespective of the policies and laws to change the ROIs. So, at the end of the month, the amount to be paid to the bank as EMI will remain the same all along the repayment tenure.

Types of Home Loans 

Due to the benefits that can be enjoyed by the borrower from the bank, people nowadays are relying on home loans. There are different kinds of home loans available in the market. These are:

• Loans for buying land

Lots of banks are there that are prepared to offer loans for buying land. 

The flexibility of buying land allows the buyer to save enough money by either turning the property into their home or into any other asset that may generate income. The best thing about buying property is that you won't have to worry about losing money since selling land for a lot of money, maybe more, can be done in real estate.

• Loans for Stamp Duty

People who wish to pay their stamp duty fees while buying a home are typically offered stamp duty loans. The state government establishes a stamp duty that must be paid when you are preparing to buy a property; here is where the stamp duty loan enters the picture. This loan is provided by several institutions and can aid with your purchase.

• Loans available for bridging

Short-term loans are available for homeowners who want to purchase a new property. When the loan term is extended for less than two years, a mortgage is often required on the new home. In other words, the buyer has the option to choose between purchasing a new property and selling the other if they so want throughout the term of the bank loan. 

New RBI Rules for Home Loans in 2023

To avail of these home loans, people must follow RBI rules for home loans. Abiding by these rules will certainly help you to build your dream house.

1. Repo rate: Repurchase rates, often known as repo rates, are money market instruments that allow for the borrowing and lending of collateralised debt through sales or purchases. In a buyback rate deal, the owner of the property sells it to a buyer with the promise to repurchase it later date.
2. LTV ratio: It represents the optimum loan that a borrower may obtain about the monetary value of the property. According to RBI, the authorisation, stamp tax, and paperwork fees would not be considered while determining LTV. This reduces the 10% down payment requirement for mortgage borrowers.
3. Prepayment charge: If a borrower can clear off the loan before the tenure ends, he or she does not have to pay the prepayment charge that was previously issued on floating and fixed interest rates.
4. Balance Transfer Provision: With this set of RBI rules for home loans, India's economy has gained enough fluidity in later years. Suppose a person has taken a loan from a bank at a fixed rate of interest, and after some years, due to his ongoing condition, he is unable to pay the loan at that rate. In this scenario, he can switch to another bank that is offering a rate of interest comparatively lower than the prior one. This will help the borrower to repay the loan within the tenure and with great ease.

These specific RBI rules for home loans help a borrower to enjoy reduced tax on home loans in the principal as well as the interest amounts. But this benefit can be enjoyed by the borrower only after the construction of the house is complete.