To extend some much needed relief to borrowers, the Reserve Bank of India (RBI) has announced a policy that can allow borrowers who have loans like home loans, auto loans etc to change their floating interest rate to fixed interest rate. This is targeted towards easing the pressure that borrowers are facing in the form of changes in interest rates on a regular basis.
1. What can borrowers do with the new RBI Plan?
As the RBI places the new plan into effect, borrowers will be able to do the following:
- Change to Fixed Rate Interest: Borrowers now have the option to choose between changing their loans from floating loans to fixed rate interest loans, meaning that their repayments are consistent and won’t change monthly.
- Clarity in Communication: Lenders must now perfectly lay out the following things:
- The total duration of the loan.
- How much you need to pay every month in the case of floating and fixed rates.
- Is there a fee that needs to be paid for paying off loans early or switching loans?
- Customizable Loan Agreements: Borrowers will now have the option to change the duration of the loan, the amount that they pay through EMI or even pay the entire loan off early whilst knowing how much this would cost.
2. Borrower’s grievances in sight
This reform is in line with a finding by the RBI in which it was discovered that some lenders had advanced the term of the loan for floating-rate loans without alerting the borrowers.
In response to this issue, the RBI will put into effect more rules to enhance fairness and transparency.
The comprehensive document with the framework underlying these guidelines is expected to be published in due course.
3. Repercussions on the Real Estate Sector
The other effect the RBI’s policy targets besides the immediate individual consumers is said to have an impact on the multi family housing properties:
- Strengthening in Infrastructure Growth: Altogether several infrastructure such as roads and bridges projects will get more funding by means of IDFs which will have a positive impact on the real estatel projects.
- Digitization for Easier Credit Access:
- A virtual platform aimed at easing the loan process.
- The platform would enable fast and easy exchange of information between the lender and the borrower making credit approval processes cheaper and quicker.
- This would be of particular use to the residential real estate sector which would benefit from fast access to capital.
4. Evident Advantages for Borrowers
In seeing this change, there seems to be a transition toward developing processes that are more aligned to the needs of the borrower with the following major benefits:
- Certainty and consistency in repayments of loans.
- Better borrower-lender relations in regard to information.
- For many more individuals and their families, the ability to buy property in the real estate market with the aid of loans based on equity and fair lending would be enabled.
Conclusion
RBI’s policy is well embraced by the borrowers as it helps in getting more control over the loans by providing the much needed reassurance.
In this sense, the real estates, individual borrowers as well as the policy as a whole come out of the transaction with winning interests when transparency is enhanced, flexibility is extended or technology is utilized.
For more information about Dream Location and to search your dream property, please visit Dream Location on Google Map. Contact us today to know more about the best real estate deals in Delhi and North India; we will connect you to the right property investment.