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For home loans, now pay a bigger pie of property value

For home loans, now pay a bigger pie of property value

MUMBAI: Prospective home loan seekers will now have to shell out 25% to 30% of the value of a property as against 20% until now with the Reserve Bank of India asking banks to exclude stamp duty, registration fee and other levies from total cost.

Effectively, this means that the 'loan to value' ratio has come down by 5-10% for home loans from what it was earlier.

Stamp duty and other levies vary from state to state. In Maharashtra, for example, stamp duty is 5%, while in Bangalore it is 8%, Kolkata 7% and New Delhi 4%.

In Mumbai, value added tax (1%), service tax (2.6%), registration fee and stamp duty add up to 9-10% of the cost of the property.

Experts believe the RBI's latest move is aimed at curbing speculation in the property market. They point out that in December 2010, in order to check excessive lending by banks, RBI had directed commercial banks against lending more than 80 per cent of the value of a property for loans above Rs 20 lakh and not more than 90 per cent for loans below Rs 20 lakh.


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