The Gap Nobody Explains
Lenders base home loan amounts on the lower of the market value or their own independent bank assessment – not the government registry value – directly affecting your loan amount and down payment requirement.
Two Values, Two Very Different Numbers
The registry value is the government-set circle rate used for stamp duty calculation. Market value is the actual purchase price agreed between buyer and seller. The gap between both directly determines how much your lender will fund.
How Banks Actually Calculate Your Loan
Banks send independent valuers to assess the property at current market conditions. The loan amount is then calculated at a 75 to 90 per cent LTV ratio applied against the lower of the bank assessment or purchase price.
When Market Value Works in Your Favour
If the market value is Rs 60 lakh and the bank independently values the property at the same figure. A 90 per cent LTV ratio provides a home loan amount of approximately Rs 54 lakh against that purchase price.
When Registry Value Works Against You
If the registry value is Rs 40 lakh but the purchase price is Rs 60 lakh, the bank may restrict the loan amount to a percentage of the lower valuation. Increasing the down payment requirement from your own funds significantly.
The Down Payment Gap That Surprises Everyone
When the bank’s assessed value is lower than the purchase price, the difference must be covered entirely from your own savings. This gap between bank valuation and actual purchase price is one of the most common home loan surprises buyers face.
Stamp Duty vs Loan Amount: Not the Same Thing
A lower registry value reduces stamp duty liability at the time of property registration. However, if the gap between registry value and market value is significant. Lenders may apply greater scrutiny to the transaction, increasing risk assessment complexity.
What to Check Before You Apply
Always request a pre-approval valuation from your lender before finalising any property purchase. Knowing the bank’s assessed value in advance allows you to plan your down payment accurately and avoid last-minute funding shortfalls at registration.
Disclaimer: The information provided on this website is for general informational purposes only and should not be considered financial or legal advice. Please consult with a qualified financial advisor before making any decisions.
