As if soaring property prices are not painful enough, the central bank's new mandate could make it more difficult for an average Indian to own a house.
Prospective home loan seekers will now have to pay as much as 25 to 30 percent of their property value (instead of 20 percent earlier) after the Reserve Bank of India asked banks to exclude stamp duty and registration fee when considering the total cost value, a report in the Times of India said.
Taxes, duties and registration fee generally add up to around 10 percent of the property value.
In 2010 the RBI had directed banks against lending more than 80 percent of the value of the property.
What does this mean?
If your property costs Rs 40,00,00 and the stamp duty and registration fee works out to around Rs 4,00,000. Your bank will only extend you a loan of Rs 32,00,000 and you will have to shell out Rs 12,00,000 from your own pocket.
Earlier the bank would have granted you a loan of Rs 35,20,000 and you would have needed to pay only Rs 8,80,000.
The year 2011 witnessed a high interest rate scenario, shrinking profit margins and soaring input costs for property developers in India.
The economic slowdown added problems for property dealers, as the number of customers dwindled in 2011. This move, experts believe, would result in a further drop in home sales.
One the positive side, this also means that home buyers will borrow less funds from banks, since they will pay stamp duty and registration fees from their own pockets.
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