What changed
RBI amended paragraph 27 of the Mortgage Guarantee Company Guidelines 2008, lowering the permissible LTV ratio for mortgage guarantees on housing loans exceeding Rs. 20 lakh from 90% to 80%. For housing loans up to Rs. 20 lakh (priority sector), the LTV cap remains at 90%.
What it means for you
Mortgage guarantee companies can no longer guarantee housing loans above Rs. 20 lakh with an LTV ratio exceeding 80%. For smaller loans (up to Rs. 20 lakh), the LTV cap is 90%. Banks and HFCs must ensure their mortgage guarantee partners comply with these revised LTV limits.
What you must do
- Ensure mortgage guarantee partners do not provide guarantees for housing loans above Rs. 20 lakh with LTV exceeding 80%.
- Verify that guarantees for housing loans up to Rs. 20 lakh comply with the 90% LTV cap.
- Update internal policies to reflect the revised LTV thresholds for mortgage guarantee recognition.
Who it affects
Mortgage Guarantee Companies, Banks offering home loans, Housing Finance Companies
What is the purpose of this circular?
To amend the Mortgage Guarantee Company Guidelines 2008 by reducing the maximum LTV ratio for mortgage guarantees on housing loans above Rs. 20 lakh from 90% to 80%, aligning with commercial bank norms.
Does this circular affect home loan borrowers directly?
No, it is directed at mortgage guarantee companies and lenders, not individual borrowers.