1 min read
25 May 2021

When you are taking a loan of any kind, it is essential to be aware of the guidelines that govern it. Familiarising yourself with RBI’s guidelines for a home loan ensures that your lender keeps true to government policies and doesn’t overcharge you.

Latest mandatory RBI guidelines for home loan

The Reserve Bank of India (RBI) ensures that home loan processes are transparent, borrower-friendly, and financially sound. Here are the key guidelines:

Interest rate regulations

  1. External benchmarks: Home loan interest rates must be linked to external benchmarks like the repo rate, ensuring borrowers benefit from monetary policy changes.
  2. Regular reset periods: Lenders must reset interest rates at least quarterly, reflecting timely updates in benchmark rates.

Loan-to-Value (LTV) ratios

  1. LTV caps: Loans up to Rs. 30 lakh allow a maximum LTV ratio of 90%. For loans between Rs. 30 lakh and Rs. 75 lakh, the cap is 80%, and for loans above Rs. 75 lakh, it is 75%.
  2. Borrower protection: These ratios encourage financial discipline, minimising over-leveraging.

Documentation requirements

  1. Identity and address proof: Accepted documents include Aadhaar, PAN, or passport.
  2. Income proof: Salary slips, ITRs, and bank statements are mandatory to confirm repayment capacity.
  3. Property papers: Sale deed, NOC, and property tax receipts are required.
  4. Credit report: A credit history check ensures the borrower’s credibility.

Home loan takeover and foreclosure

RBI has set guidelines for home loan balance transfers as well, so you can refinance your home loan at lower interest rates and a tenor that suits you. RBI has also waived off foreclosure charges, further adding to the benefits that you can accrue.

Here is an infographic that explains the mandatory RBI guidelines and will help you choose the right Home Loan.

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Frequently asked questions

What is the minimum period for a home loan?

With Bajaj Housing Finance, you can enjoy flexible repayment tenure extending up to 32 years. This provides ample time to repay your loan comfortably.

Is ITR required for a home loan?

Yes, Income Tax Returns (ITR) are generally required for home loan approval. It helps lenders verify your income and assess your repayment capability.

What is the current Reserve Bank of India Repo Rate for home loans in India?

As of now, the RBI's repo rate stands at 6.50%, impacting home loan interest rates. The repo rate influences the cost of borrowing for lenders, which in turn affects home loan rates.

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