In a recent notification by RBI has called all banks to follow a common method of calculating what constitutes the Home Value. Till now banks used to add stamp duty, registration and other documentation charges to arrive to the final value of your home and then used to sanction 80% – 90% of the same as the loan. With the new rule the banks cannot include these document charges as these are not reliasable while selling the house.
Current regulations permit banks to lend up to 80 percent of a home loan above Rs 20 lakh and up to 90 percent for loans below Rs 20 lakh.
If the above-mentioned charges are excluded, property values will be estimated lower by banks. That will reduce the amount of loans that borrowers can get — and increases the cost of buying property making it further unaffordable.
You can read the RBI notification here.