The central bank prohibits bank and financial institutions (BFIs) from raising the monthly installment even when there is a rise in the interest rates of loans. Likewise, the central bank has also raised the loan to value (LTV) ratio – the maximum amount of loans that a bank can float out of the total valuation of the collateral – to 70 per cent for such first-time home buyers.
Amending the ‘Unified Directives 2075’, the central bank has, however, said that the loan repayment duration could be extended beyond the originally slated period, despite the prohibition to increase monthly installment amount.
The maximum limit of the loan that a buyer can get to purchase a house or apartment under this category has been fixed at Rs 15 million, the ‘Unified Directives 2075’, that is a collection of rules and circulars issued to the BFIs.
“The new provision will offer a respite for the borrowers even in case of interest rate rise,” Nepal Bankers Association said, adding that there will not be an immediate pressure of paying more money in installment.
According to the ‘Unified Directives 2075’, a bank can also provide loan amount up to 70 per cent of the total valuation of the home to the borrower. “The limit for other residential home loans has been capped at 50 per cent inside the Kathmandu Valley and 60 per cent outside the valley,” it reads, adding that the banks and financial institutions (BFIs), however, should make sure that the borrower has not acquired any loan to purchase or construct house or apartment from any bank or financial institution. “The central bank has also fixed certain criteria for loans under this new arrangement,”
The house or apartment, which should be inhabited only by the borrower, should be of maximum 3,000 square feet,” according to the central bank.
“The bank will not consider the rent earning from the house or apartment as the borrower’s income source for the loans floated under this category,” according to the ‘Unified Directives 2075’ that reads, “Apart from the value of the collateral, a bank should take into consideration the regular income of the borrower to ascertain the repayment capacity while floating personal loans.”
Amending the ‘Unified Directives 2075’, the central bank has, however, said that the loan repayment duration could be extended beyond the originally slated period, despite the prohibition to increase monthly installment amount.
The maximum limit of the loan that a buyer can get to purchase a house or apartment under this category has been fixed at Rs 15 million, the ‘Unified Directives 2075’, that is a collection of rules and circulars issued to the BFIs.
“The new provision will offer a respite for the borrowers even in case of interest rate rise,” Nepal Bankers Association said, adding that there will not be an immediate pressure of paying more money in installment.
According to the ‘Unified Directives 2075’, a bank can also provide loan amount up to 70 per cent of the total valuation of the home to the borrower. “The limit for other residential home loans has been capped at 50 per cent inside the Kathmandu Valley and 60 per cent outside the valley,” it reads, adding that the banks and financial institutions (BFIs), however, should make sure that the borrower has not acquired any loan to purchase or construct house or apartment from any bank or financial institution. “The central bank has also fixed certain criteria for loans under this new arrangement,”
The house or apartment, which should be inhabited only by the borrower, should be of maximum 3,000 square feet,” according to the central bank.
“The bank will not consider the rent earning from the house or apartment as the borrower’s income source for the loans floated under this category,” according to the ‘Unified Directives 2075’ that reads, “Apart from the value of the collateral, a bank should take into consideration the regular income of the borrower to ascertain the repayment capacity while floating personal loans.”
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