Money & Banking

LIC Housing Finance trims home loans to all-time low of 6.9%

Our Bureau Mumbai | Updated on July 22, 2020 Published on July 22, 2020

Siddhartha Mohanty, MD & CEO, LICHFL

Low EMI payment for borrowers

 

LIC Housing Finance Ltd (LICHFL) has decided to take on giants in the housing finance space such as Housing Finance Development Finance Corporation (HDFC) and State Bank of India (SBI) by offering new home loans at 6.90 per cent.

Currently, the lowest home loan rate charged by HDFC and SBI is 6.95 per cent.

LICHFL’s move to offer home loans at 6.90 per cent could set off a rate war in the housing finance space.

The housing finance company, in a statement, said the rate of interest for new home loans (including for balance transfer) up to ₹50 lakh starts from 6.90 per cent for borrowers with CIBIL (Credit Information Bureau) score of 700 and above.

For a similar score, the rate of interest is 7 per cent onwards for loans above ₹50 lakh.

Siddhartha Mohanty, MD & CEO, LICHFL, observed that home loan interest rates are at an all-time low for the company, resulting in low EMI (equated monthly instalment) payment for borrowers.

“Attractive price points and affordable EMI will aid in addressing the demand side for buying homes. As we adapt to a new normal of living and working conditions, home ownership is considered as an important sense of social security,” Mohanty said.

Home loan for pensioners

LICHFL has launched a special home loan product ‘Griha Varishtha’ for pensioners. The tenure of the loan is till the attainment of 80 years of age or maximum up to 30 years, whichever is earlier.

Per the statement, this product caters to retired or serving employees of PSU insurers, Central/State government, railways, defence, banks, etc entitled to pension under Defined Benefit Pension Scheme.

For higher loan eligibility, the applicant can also jointly apply with his/her earning children. Additional benefits under this scheme include six EMI waivers for customers who opt for ready to move units or 48-months moratorium period for purchase of under construction units.

Moratorium

Of LICHFL’s construction finance portfolio of about ₹13,000 crore, 60-70 per cent is under Covid-related loan repayment moratorium, Mohanty said.

When it comes to home loans, 25 per cent of the borrowers had opted for moratorium in April. But this has come down to 46,000 customers, who had initially taken moratorium, started paying EMIs.

Mohanty underscored that LICHFL has been allowing existing home loan borrowers to shift to lower interest rates on payment of a nominal fee for re-writing. Though it pro-actively reduced rates twice for existing borrowers in the last couple of months, the company did not charge a fee as it had already done so in April, he added.

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Published on July 22, 2020
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