25 MAY, 2021

The rate of interest charged on a home loan is a crucial factor that determines your monthly instalments. Thus, a lower home loan interest rate would translate to lower EMIs, and consequently, lesser repayment burden. While you can take certain measures from your end such as enhancing the credit score, strengthening sources of income, etc. for availing home loans at a relatively lower rate, Reserve Bank of India (RBI) has also modified some regulations to make home loans more affordable. Read on to know more about the same:

In one of its recent statements, RBI said that it will rationalise the risk weights and link them to Loan-to-Value (LTV) ratios for new home loans sanctioned up to March 31, 2022. The Loan-to-Value (LTV) ratio refers to the amount of home loan granted against the total value of the property. As a result of this rationalisation, lenders would have to earmark a lower risk for home loans, and hence, would be in a better position to lend more to their customers at affordable rates.

The table below denotes the LTV ratio and their corresponding risk weights before rationalisation.

Loan Amount

LTV ratio

Earlier Risk Weight

Up to Rs. 30 lakh

Less than 80%


Up to Rs. 30 lakh

Between 80% and 90%


Above Rs 30 lakh and up to Rs 75 lakh

Less than 80%


Above 75 lakh

Less than 75%



Post rationalisation, all home loans with an LTV ratio of 80% or less will have a risk weight of 35%. While the risk weight for all home loans with an LTV ratio between 80% and 90% has been set to 50%.

This move will significantly benefit home loan borrowers who are availing a high-value loan of above Rs 75 lakh, as they can avail a home loan at a relatively lower interest rate.

Therefore, if you are looking forward to availing a home loan to finance your property purchase, you can easily avail a high-value loan without worrying about the interest rate shooting up considerably. With Kotak Mahindra Bank, it’s possible to avail a home loan at an extremely competitive rate of 6.65% p.a. Moreover, you can easily get a loan amount up to 75% to 80% of the property’s value with Kotak Mahindra.

You can repay the loan in easy instalments by choosing an EMI and loan tenure that suits your budget. The entire process of availing a home loan with Kotak Mahindra Bank is seamless and hassle-free. Minimal processing charges and quick loan disbursement are some of the other benefits of availing a home loan with Kotak Mahindra Bank. However, make sure to check your loan eligibility with the help of an online home loan eligibility calculator before applying for a home loan. This will increase the approval chances of your loan application. Also, read and understand the terms of your home loan agreement carefully to avoid any inconvenience later. If you want to avail a high value home loan for home purchase anytime soon, RBI is aiding the journey through it’s measures that you must keep an eye on.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.