HIGHER LOAN AMOUNT FOR HOME REPAIRS The RBI enhanced the limit on these loans recently.Ashish Gupta elaborates Banks offer loans for house repairs,and a d d i t i o n s / a l t e r - ations.Recently,the Reserve Bank of India (RBI) enhanced the limit.The RBI decided to enhance the ceiling on a loan to an individual for repairs,additions and alterations on their dwelling units to Rs 2 lakhs in rural and semi-urban areas,and Rs 5 lakhs in urban areas.A loan granted under this enhanced limit will also be eligible for classification under priority sector lending. Usually,the terms and conditions for such loans are the same as for the regular housing loans.Individuals with a steady source of income are eligible to apply.The loan amount varies from bank to bank.While there is no upper limit,the actual loan amount disbursed is determined on the basis of the repayment capacity taking into account the income,age,assets and liabilities of the applicant.The margin requirement is 20-30 percent of the project cost.What this means is that the bank finances 70-80 percent of the projected expenditure.The balance 20-30 percent is to be financed by the borrower from his own resources. One primary condition to avail this loan is that the property should be in the name of the borrower.Depending on the amount required and the policy of the bank,adequate additional security by way of lien over the credit balance in deposit accounts,guarantee of a third party etc may be asked for.The guarantor should be of adequate financial means.The additional security/guarantee will be released after the loan amount together with the accumulated interest is cleared by the borrower In the case of an old house,one may need to get a valuation certificate from an approved valuers as well as a certificate from a government-approved architect or structural engineer regarding the condition of the house as well as its remaining lifespan. The loan is available for a tenure up to 15 years.The processing charge applicable could range up to two percent of the loan amount,and is payable upfront.Many banks waive off the processing fee on a loan availed during the festive season.Usually,the same rate of interest is charged as is charged on a regular housing loan,depending on the amount borrowed,tenure and interest option - fixed or floating. In addition to the usual documents,a borrower needs to submit proof of ownership of the house,estimated expenditure,break-up of estimated expenditure,certificate by an architect or valuer,new approved building plan and valuation certificate. The repayment is through equated monthly instalments.In case of a loan borrowed for reconstruction or repairs,the maximum deduction against interest paid is Rs 30,000 and not Rs 1.50 lakhs.TNN
Posted on: Fri, 13 Sep 2013 05:34:42 +0000