There is famous saying that "Life comes FULL Circle" which is true for Prepayment Penalty on Home Loan. In 2011, prepayment penalty was first abolished by HFC's like HDFC Ltd, LICHFL, etc. followed by banks in 2012. Now same HFC's are demanding reintroduction of prepayment penalty. The background of this move in 2011 was differential interest rates charged to Existing Home Loan customers. Rather than fixing the core issue of equal interest rates for existing and new customer, NHB and RBI took an alternative route to abolishing prepayment penalty on floating interest home loans. In short, ... Read More
Revised Guidelines on Home Loan from HFC
It's all over for small HFC's (Housing Finance Companies). As i highlighted in my posts Home Loan from Housing Finance Company and Subvention Schemes that higher Loan to Value ratio and Subvention schemes were 2 critical USP's of the HFC's. In comparison to banks, potential borrowers preferred HFC / Housing Finance Company because of higher home loan disbursement. It was also beneficial for builders as HFC's were disbursing substantial Home Loan amount upfront to the builders under subvention schemes. RBI already banned subvention schemes for banks. HFC's are governed by NHB therefore they ... Read More
Pay High Interest for Higher Loan to Value Ratio
Indian Home Loan Market is gradually maturing. Sometime back a very imp news which went unnoticed was regarding setting up of India Mortgage Guarantee Company (IMGC). India Mortgage Guarantee Company is promoted by IMF, AIG and NHB (National Housing Bank) which in turn is wholly owned subsidiary of Reserve Bank of India (RBI). All HFC's (Housing Finance Companies) have to register with NHB before starting Housing Finance Business. Now you must be wondering why i am sharing this background and as a borrower how will i benefit from setting up of India Mortgage Guarantee Company. Lets check it ... Read More