Click to play videoNew Delhi: Getting a home loan is not going to be as easy as it used to be. In fact most loans will soon be out of reach for small earners as the banks are now doing away with special offers, discount schemes and low EMIs. Now, your earning capacity will decide whether you can get a home loan or not.
The reason why banks are tightening rules on loans is the huge amounts of bad debts coupled with slow credit growth due to high interest rates by RBI. Banks are now planning to target only high-income earners, and cut down on discounts and special offers.
“The consistency of loan repayment has stalled completely. We are adopting a restrictive approach now. However, it’s not like we are barring everybody from taking loans. We used to allow group bookings from employees. But now we are not allowing all that,” General Manager, Bank of Baroda K S Suvarna said.
Banks are not just stopping here. They are also asking loan seekers to pay higher margins. Margin money is the upfront down payment that reassures the bank, of the borrower\'s financial stability and commitment.
Currently a borrower pays 10 to 15 Percent margin. But banks are now planning to increase this margin to between 20 and 30 percent.
“Margins will go up as banks become more selective. The banks would want to make sure that you have the ability to payback the loans,” said RP Sharma, General Manager, Central Bank.
With the property sector over heating, the Finance ministry and the RBI were forced to make money, more expensive for banks. Hiked interest rates and the cash reserve ratio have resulted in home loan rates surging way above 11 percent per annum. Now with the new steps by banks, not only will they be expensive, but also hard to get.
(For updates you can share with your friends, follow IBNLive on Facebook, Twitter, Google+ and Pinterest)
More on IBNLive Right Now
MOST SHARED
PHOTOGALLERY
