BANKS TAKE STEPS TO TIGHTEN LOANS FOR SECOND HOMES

Buying a second home will only get tougher. Banks have started charging a higher rate of interest and demanding stiffer margins on loans taken to buy a second or third home. The state owned Punjab National Bank is the first to do this. The bank decided to charge one percentage point more than its regular card rate for ‘second home loans’. The country’s largest bank – State Bank of India – on the other hand, has decided to increase the margin on such loans to 25% as against 15% for first home loan. Other lenders like Bank of Baroda and Union Bank of India are in the process of formulating a policy on loans sought for purchasing a second home.