By Dr. Sanjay Chaturvedi, LLB, PhD.
New Norms in Housing Finance LTV
The condition in sanction letter is “85% of Agreement value or 65% of market value which ever is less”
Now suppose agreement value is 42,00,000/-. The 85% of agreement value comes to Rs.35,70,000/-. Since the flat is first sold and builder is selling for Rs.42 Lakh, and the Circle Rate or Stamp Duty Ready Reckoner value is Rs.38 Lkahs.
Now 65% of market value will have to be the agreement value and hence only Rs.27 Lakhs will be disbursed according to the term.
The margin has to be paid upfront. That is, 35% of the agreement value has to be paid by the loan seeker. And in under construction projects, one has to pay this 35% as and when asked for.
Margin is big money and reducing the affordability if kept at higher percentage. Banks do have policy of 85% but such riders of 65% is reducing the affordability. At rates which should be between 7 to 9% in India, while RBI have already sent strict instructions to reduce the interest rates, none of the bank have reduced it from 11% on wards.
Administrative fees has again came as one of the revenue source while credit managers are working as government department babus. A DSA connected with ICICI said that home loan files are rejected for want of bribes. If one pays bribe it is easily passed even if the profile do not match their credit policy.
Builders marketing employees also wants a cut from loan sanction commission and agents are active to have cut between leads given by builder’s marketing staff to DSA and bank employees.
Loot is in offing and one has to sit in open for every corner of profitmongers to rap them. Govt taxes or such home loan agents.