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Loan to Value Ratio (LTV): LTV denotes the part of the property value that can be availed as a home loan from the banks. The LTV ratio is based on the price of the property that a buyer wishes to buy. Some banks include the stamp duty & registration costs while determining property value, some other banks exclude the government costs.
RBI has ruled down a ratio for the LTV of a home loan. This ratio made mandatory by RBI allows an LTV of 90% for home loans of Rs. 30 lakhs or less. For home loans more than 30 lakhs and up to 75 lakhs, the RBI mandates an LTV of 80%. For home loans more than 75 lakhs, the RBI mandates an LTV of 75%.
However, the down payment has to be made before applying for a home loan. The risk is shared between the borrower and the lender. Making a down payment is mandatory because giving a loan bears risks and no lender would take that risk and would like to share it with the borrower.
There’s a new emerging fintech company that allows 50% down payment assistance to the first time buyers. Named as HomeCapital, they have fulfilled the dream of millions of home buyers using this program. The Down Payment Assistance Program is in the form of interest-free credit through their partnered financial institutions.