How to Save Money on Home Loans?

Taking a Home Loan is one of the biggest financial decisions in life. It is often the first step towards building your own nest. It is very easy to get carried away and not take into consideration some of the important factors while taking a home loan. If you keep these things in mind then you can save money and also clear your home loan at the earliest possible.

Lets us understand how to pay off home loans faster:

• Re-examine your financial situation: Before taking any measures to pay off your home loan faster, first do a self check of all financial investments. Look at the short, long and medium term investments made and make sure that none of these are getting affected by the loan payment. The surplus amount of earnings left after meeting other financial goals should be directed towards payment of the home loan.

• Change EMI and save interest: Before choosing an Home Loan EMI option that is lower, think twice. Even if you increase your monthly EMIs by a slight amount, there is a chance that you will have to pay a lesser interest. This in the long run will put more liquid funds in the hand and will also help you pay the loan amount in a shorter span of time. You can choose Bankbazaar's Home Loan EMI Calculator to calculate Home Loan EMI for your loan amount.

• Consider partial payments: Whenever you have surplus funds in hands after receiving a bonus or increment, redirect those funds towards payment of the loan. Most banks and financial institutions allow this. This is one of the most convenient methods to clear loans in a speedy manner.

• Budget other expenses: When you have a loan in hand, make it the first priority to clear the debt. If not, the interest rate will keep on adding up and it will become a financial burden that leads to a lot of frustration and emotional stress. This will affect your other financial goals and also make it difficult for family members. So cut down on luxurious spending, expensive holidays and splurging for while and direct those funds towards the loan instead.

• Make a bigger down payment: It is always wiser to choose to make a huge downpayment to cut down on interest rates. The higher the down payment, the lesser the interest rate on the loan availed and vise versa.

• Take a loan for a short term: Though this may sound overwhelming in the beginning, it is always better to take a loan for a shorter duration. This will help  you pay off faster and also help save a considerable amount of money that will otherwise go out of the window as interest.

Apart from all these measures, it is also important to weigh all the pros and cons even before taking a plunge and going for a home loan. Compare all bank interest rates and choose one that is best in the market. Also, if you are a regular and long-term customer of a bank, make sure you negotiate and ask for a lower interest rate. Most banks will offer these kind of discounts to loyal customers.

Things to Consider Before Transferring Home Loan

If you are a home loan borrower, you must have seen other banks asking you to transfer your loan to them to gain benefits such as Longer Tenure, Lower Home Loan EMI, lower Home Loan Interest Rates etc. Transferring home loans means that the pending loan amount that you have with one bank will be transferred to another bank. In this case, you will be repaying the pending amount and continuing your loan with the new bank.

Transferring home loan from one bank to another is not a bad idea, but borrowers must be aware of all the pros and cons related to it. Home loan borrowers should take into consideration different factors before they decide to transfer their loan to another lender.

Things to Consider:

• Total Outflow – You should calculate the total loan amount that you have to pay back to the bank before you decide to transfer your home loan. Calculating the total outflow will help you compare the difference between the repayment amounts of your current and new banks. The new bank may reduce your EMI by increasing the tenure, but you must remember that in this case interest will keep adding on your outstanding amount. It is advisable to increase your EMI amount and clear off your loan sooner to save money on interest. If you are already paying a higher EMI to your current bank and are not struggling for cash, then you might not want to transfer your loan.

• Charges – If you take a home loan, you will have to pay various charges besides interest such as processing fee, legal charges, stamp duty, etc., to your lender. Before deciding to transfer your home loan to another lender, you must take into consideration all the charges (including interest) of the new lender and compare them with the charges of your current lender. Some banks charge a percentage of the loan amount as processing fee, some have a fixed amount while there are others whose processing fees is dependent on the occupation of the applicants. Also, if your current bank finds out that you are transferring your loan to another bank, it might increase the closure charges.

• Collateral Security – If you had provided a collateral security to your current bank while taking the home loan and have already repaid a huge part of your loan, then do not offer the complete collateral again to the new bank. It does not make sense to offer a collateral, the value of which is double your pending loan amount. You should offer a lower amount as collateral or ask the new bank to lower down the interest rate.

• Loan Terms and Conditions – Before you sign any loan agreement, you must read the terms and conditions of that particular loan. In case of loan transfer, you should read and compare the terms of both the banks to understand the pros and cons.

• Allied Account – Banks generally ask their borrowers to open a savings account with them when they apply for a loan. If the bank to which you wish to transfer your loan asks you to open a new account with it, then you should first find out the benefits and charges of that account. Also, if you use the current account of your current lender for all your banking needs, then you would be their premium customer. Premium customers enjoy extra benefits and services are provided to them quickly by banks. You should think carefully if you really want to lose this comfort and switch your loan to a new bank or stay with your current bank.

• Other Offers – Some banks try to attract customers by offering them extra benefits along with home loans such as credit card, insurance, etc. Before agreeing to transfer your Home Loan to another bank to avail such offers, you must consider if you even need them or not. Also, you must read the terms and conditions of such offers before accepting them.

These are some of the things that you must consider before transferring your home loan to another bank. Do not get attracted by offers such as low interest rate, free credit cards, insurance, etc., easily. Research well and choose wisely.

Developers want Home Loan Interest Exemption to be upped

The real estate market in India exhibits a practical example of demand and supply – basic law of economics. The soaring prices of property depict its excess demand which is making investment more expensive with each passing day. The high appreciation in property prices, ranging up to 50%, has not only caught the common man’s attention, but has even tempted NRIs to invest their funds. At this point, the government has to play a crucial role in the revival of residential real estate prices with new policies, increased tax exemption, and reduced interest rates, etc.

Home Loans in India

The boom in the real estate sector has given home loan business a new dimension by attracting various investors to build their dream house. Though home loans have always been the best choice for the end customers, but in the recent times, constant home loan tax exemption of Rs 1.5 Lakhs has failed to match the inflation. The middle income groups, especially the salaried individuals’ feel prohibitive prices and a few incentives make their dream beyond reach. Furthermore, the current tax benefits are too less to fuel the demand and propel growth in infrastructure.

Need for Increase in Tax Exemption on Home Loan

With the entry of a stable government, everyone is expecting the upcoming budget to provide the required policy incentives, stability and tax concessions for promoting the investments and economic growth of the country. The new government should primarily focus on continuing stimulus measures, seeing the delicate situation of economic recovery.

Specifically, in the context of real estate, developers feel a strong need for tax exemption in order to make home loan finance sector affordable. Few of the key recommendations for the upcoming budget are listed below:

·          Infrastructure status to be given for affordable housing: In this scenario, once the infrastructure will fall under priority sector lending of banks, it will provide funds at less rates.

·         Increase in exemption limit for home loan interest: The tax benefit for home loan interest has been the same at Rs 1.5 Lakhs since 2001. Since, the real estate prices have increased manifolds; the amount of loan required by an investor has also been directly affected. Developers are of the opinion that if this limit is increased to Rs 3 Lakhs, it might help in bringing back the boom in the real estate industry. This would surely be quite lucrative for the investors as it would imply additional tax savings as well.

·         Revision of home loan limit for PSL: The housing loan limit should be revised from Rs 25 Lakhs to Rs 35 Lakhs under PSL as this move would help buyers who are struggling to buy property due to soaring prices.

·         Income tax rebate should be extended to the private sector for the development of affordable housing

To sum up, the raised expectations of developers should be considered in order to review the benefits that housing loans provide under the various sections of income tax act. This move will definitely help people at all levels to borrow in order to fulfil their dream of owning a property.

How to Choose the Best Home Loan in India?

There are a number of financial institutions and banks in India that provide varied banking solutions, loans, investment options and many more services according to an individual’s requirement. All banks are competitive in terms of offers, discounts and the interest rates; hence, it becomes worrisome to select the best amongst the hundreds of alternatives.

There are more than a hundred banks in India which provide home loans to all classes of people on the basis of affordability. The main and foremost feature to look in the home loan is the “home loan interest rates” along with the repayment methods. It should be competitive enough with no hidden charges, quick processing time and the transparency throughout the procedure.

Understanding the types of home loan interest rates helps to select the ideal one.

Ø  Secured Home loan: These are loans provided against some kind of security or guarantee, such as a loan against property, any valuable asset, or jewellery or some legal documents. If any default situation arises, then the pledged thing becomes the lending institution’s property. In this case, the interest rates are comparatively less.

Ø  Unsecured Home loan: Loans are issued without any security, but the interest rates are higher as the loan is disbursed under the lender’s risk.

Ø  Variable Interest Rates: The interest rate may increase or decrease depending on the market fluidity.

Ø  Fixed Interest Rate: Here, the rate of interest is fixed throughout the loan tenure.

Ø  Split Loan: Some lending institutions or banks also provide split loans in which half of the loan amount is of variable type and the rest would be of fixed type.

Along with home loan interest rates, there are a few other features to be looked into while going for a home loan.

1. The EMI concept - The Equated Monthly Installments (EMI) are calculated using the home loan EMI calculator, depending on the down payment amount, and the loan amount. The loan amount includes the principal rate and the rate of interest. The more the down payment, the lesser the EMI would be. Calculate and think about the size of EMI you can afford every month till the loan tenure.

2. Loan Tenure - Loan tenure can be adjusted according to the affordability of the EMI. The increased loan tenure contains the increased rate of interest as well.

3. The Processing and other hidden charges -  There are banks, which believe in serving the people in any way, thus such banks waive off the process fee with an affordable interest rate. Compare the banks for the transparency in the procedure.

4. Ensure the Eligibility criteria and the documentation process - Compare the eligibility criteria, some banks are not stern about the eligibility and also provide a relaxation in the age and income factors. Ensure the facts and ensure a hassle free documentation check process.

5. Prepayment / Foreclosure options - The home loans can be closed anytime after six months of loan disbursal with a small percentage of foreclosure charges of the outstanding principal amount.

Thus, narrow down your search after considering and understanding the features to choose the best home loan, which can be applied either online or at the nearest branches with the required documents. Then the essential verification are done to disburse the home loan in 3-4 days.

Home Loan Delay Bugs Customers

Home loans can easily be termed as the best financial schemes that allow borrowers to build their own dream house. In India, all the major banking institutions are known to offer high quality home loan schemes to customers who are willing to buy a new home. Even though the process of applying for a home loan is simple and straightforward, you might face certain delays due to various reasons. If you feel that home loan bugs customers, then you’d be wrong as by avoiding certain mistakes, you could easily make the process run smoother.

Home loan delay bugs customers who are in search of a quick loan advance; and the best thing that you could do as a borrower is to go through the reasons why you might have to face a delay. This will surely help you in improving your situation and putting the best foot forward.

Applicant’s income

The borrower must have a certain amount of monthly or annual income for being able to apply for a home loan. So, if you don’t submit the right salary slips that show your monthly income, then you might have to face a lot of delay because the bank is going to delve further into the matter before granting you a loan.

Opening cash reserves

Even if you meet all the eligibility requirements, the bank might ask you to open a cash reserve in which you’ll be asked to maintain a certain amount of balance in one of the bank accounts. This amount is kept aside as a security for the bank in case you fail to make further payments.

Credit history

Most of the banking institutions spend a lot of time in conducting a background check. They carefully go through your credit history to determine the fact that you’re a capable borrower who can easily repay the loan. So, it’s advised that you keep your credit history and report clean prior to applying for the loan.

Employment details

It is best to put forward your employment details in front of the bank as and when you submit the application form. If you fail to submit your documents, the bank might spend a lot of time doing a comprehensive check on your employment history which in turn would delay the whole procedure.

Incomplete or missing documents

If you fail to produce any kind of documents or even your photographs on time, then you might face an unwanted delay during the application procedure. A home loan cannot be granted to a borrower unless he has submitted all the documents in the head branch.

Applying on the Closing Day

You could even face some delays if you’re visiting the bank on the closing day. Banks usually don’t deal in any kind of customer services on this day and so you might have to delay the procedure by a day or two. So, you got to plan out your visit beforehand so that you can secure the loan easily.

These are some of the reasons why a home loan delay could bug the customer. Try to create proper strategies for making the home loan acquisition process a smooth and simple one! 

Why you must thank RBI for ending penalties on pre-paying home loans

The Reserve Bank of India has given millions of loan borrowers respite from pre-payment penalties.It had done away with pre-payment penalty on home loans long ago. This time, the apex bank has instructed all banks to abolishpre-payment penalty on all floating interest loans. The ruling applies to home loans, corporate, vehicle and personal loans, auto loans, personal and education loans that are repaid with a floating rate of interest.

RBI’s new regulations, especially on prepayment penalties, have brought a lot of cheer for the common man.In its first bi-monthly monetary policy statement for 2014-15, the RBI has directed banks to consider allowing their borrowers the facility of prepaying floating rate term loans without any penalty."...it is advised that banks will not be permitted to charge foreclosure charges or pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect," RBI said in its notification.

Prepayment penalty has been a demotivating factor to all loan customers, whenever they are in a position to pre-pay their loans. Especially, home loans are usually in lakhs and even a pre-payment penalty of 2 per cent of the total loan amount causes a big dent on your pockets – on a 20 lakh loan, it would comet Rs 40,000. Thanks to the RBI, you don't have to pay such huge sums of money to repay your loan. 

Many of you tend to go for pre-payment of loans when you find that interest rates show a continuous upward movement. Some of the customers opt for switch-over of their loans with existing banks to the lenders offering lower interest rates on loans.

Banks and other lending institutions have been very reluctant to part with the extra interest charge on the pre-payment charges on loans as it is their main source of income. The expansion plans of these institutions usually hinge upon their income on loan repayments. So, if you pre-repay your loan, in part or in totality, they lose a lot of their future income. So, customers are discouraged by banks to close off loans by way of levying-these penalties with considerable monetary implications.

As the prepayment penalties now-stand annulled, lending institutions would have to explore channels of raising their funds from alternative resources. But it is not that much of your concern as borrower.

As mentioned earlier, the RBI had forbidden foreclosure charges or pre-payment penalties on home loans on floating interest rate basis. The move aimed at ending the discrimination between existing and new borrowers and bringing uniformity across the banking system in the home loan segment, which was a logical course. Now the benefit same has been extended to floating rate term loans, which will help small and medium enterprises as well. Banks will no more be allowed to deny the benefit of lower loan liability to all their customers.

So, you have every reason to profusely thank the RBI for ending penalties on pre-paying all debts taken on floating interest rates, including home loans.

What are the eligibility conditions for a home loan?

Home Loans are generally given to three categories of individuals by banks - salaried individuals, self employed professionals and self employed non professionals. The eligibility conditions vary for these three categories in most banks. The repayment capacity and eligibility of the borrower is determined based on several factors like age, tenure of loan, income, employment type and status, spouse's income, stability and continuity of occupation etc.

Let’s look at the main eligibility conditions:

Age of Borrower: Banks prescribe a minimum and maximum age of the borrower. The minimum age is usually 21 years of age. The age of the co-applicant is also specified by banks. The maximum age is given in terms of the age of the borrower at the time the loan ends. So while ICICI specifies this to be 65 years of age or retirement age, Axis Bank is more stringent for salaried borrowers at 60 years on loan maturity. Self employed individuals and professionals in Axis Bank have the maximum age at loan expiry criteria to be 65 years. Some banks like HSBC give different age limits for salaried individuals in private companies, government companies and self employed individuals.

Employment: Generally, all borrowers are expected to be either salaried with private or government companies, self employed professionals or self employed non professionals. As a home loan is a large liability, banks would want to make sure of the stability and continuity of employment while granting the loan. It is for this reason that in some cases, the eligible loan amount is lower, as the job may be viewed to be more risky compared to others.

Income criteria: Banks determine eligibility criteria based on the income of the individual. Although many public sector and private sector banks do not specify this amount in black and white, some banks like HSBC do so. For example, HSBC has minimum net income criteria of Rs. 5 lakhs per annum for salaried borrowers and Rs. 7.5 lakhs per annum for self employed borrowers. Some banks look at income on gross basis, while others consider the net take home salary for determining eligibility.

Spouse’s income: Most often, borrowers take a joint home loan along with the spouse to enhance loan eligibility. Banks also suggest this option. In this case, both the applicants’ incomes are considered. As the income base is increased, the repayment capacity is higher and therefore the amount of loan you are eligible to borrow increases.

Other loan commitments: When you borrow a home loan, the repayment capacity is of paramount concern for the bank. Therefore, the loan eligibility is worked out by calculating backwards on the Equated Monthly Installment (EMI) amount. This is compared with your monthly outflows, most important of which are payment of other loan commitments like car loan, education loan, etc. and the ability to pay is determined. This is a major determinant of the loan eligibility.

Other factors: Banks have internal stipulations on minimum and maximum loan amount, maximum tenure etc. Although these do not determine your eligibility directly, they have an indirect effect. For instance, the tenure you choose will determine your EMI, which in turn will be checked to determine the repayment capacity and hence the eligible loan amount.

BankBazaar.com online eligibility calculator can be used to check the eligibility for a home loan. This calculator would ask for details such as the monthly income, current loan obligations, loan tenure, interest rate, age of borrower and employment type, based on which the borrower’s loan eligibility is calculated and given instantly.

State Bank of India to Hold Home Loan Rates

Among the several loans offered by banks and housing finance companies in India, SBI home loan products are the most preferred options among home buyers. Being the apex financial institution in India, State Bank of India disburses a wide range of standard as well as personalized home loans to interested customers. With a range lying in between Rs.5 Lakh to over Rs.5 Crores, SBI aims at catering to the housing finance needs of people from all walks of life. All it takes is a little homework and one can easily secure ideal home finances at the best SBI home loan interest rates.

With several lenders revising their interest rates, while keeping the interests of their valued customers in mind, the mortgage market is experiencing a gradual growth lately. However, when it comes to SBI home loan deals, customers might be a bit disappointed by the recent decision taken by the topmost public sector financier in India. In a recent public meet, a senior official of the bank announced that SBI will retain its home loan interest rates for an undisclosed period of time.

The Reserve Bank of India (RBI), the Indian banking watchdog, lately kept its policy rates stable. However, in a recent announcement, the RBI lowered the borrowing limit for banks from the overnight facility. The lowering of the borrowing limit is generally followed by a rapid rise in the cost of funds for the lenders. Though the cost of funds is likely to go up in the near future, there will certainly be no change in the SBI home loan interest rates. However, there are some banks that have raised their lending rates, following the reduction in the borrowing limits, which is likely to increase the demand of SBI home loan deals in the market.

Being the most preferred lender in India, SBI still aims at providing maximum benefits to the customers by offering stable interest rates, personalized tenure, flexible repayment terms and superior customer service. As of now, the State Bank of India is charging an interest rate of 10.10% p.a. for a SBI bank home loan up to Rs.75 Lakhs from woman borrowers. However, for the amount of home loan exceeding Rs.75 Lakhs, the bank is now charging an interest rate of 10.25% p.a. Last month, SBI also decided to extend its special home loan scheme for women for an indefinite time period (earlier valid till 31st March), seeing the tremendous response it received all across the nation. On the other hand, from the regular borrowers, SBI demands an interest charge equivalent to 10.15% p.a. of the SBI bank home loan amount to Rs.75 Lakhs and 10.30% p.a. for amount above Rs.75 Lakhs.

Being categorized on the basis of the amount borrowed by an individual, home loan SBI can serve every distinct purpose of the borrower, ranging from new home/plot purchase or constructing a new home, to renovating or expanding a current residential property. One just needs to be careful while comparing the SBI bank home loan products with personal need and wants for making a wise selection to fulfill the long cherished dream of owning a house.

Documents List for HDFC Housing Loan

The evolution of home loan market in recent times has meant that a large number of people have been able to relive their dream of owning a house. If it was not for easy availability of home loans, the rising real estate prices would have meant, buying a home out of bounds for the average Indian citizen with limited income. A number of public banks, private sector banks and non banking financial companies offer home loans subject to minimum eligibility criteria. Any individual with a well oriented financial health capable of repaying his or her home loan obligation can avail the advantage of housing loans.

Let us take a look at home loan eligibility criteria and documents required for home loans from HDFC home finance limited.

Home Loans from HDFC Home Finance: 

HDFC home finance limited is a leading non banking financial company offering home loans to a large number of projects across the country. HDFC limited offers housing loans for existing freehold properties as well as on flats, bungalows and row houses from developers including properties in existing or proposed co-operative housing societies. HDFC home finance is one of the most popular non banking financial companies for housing loans offering easy repayment options. HDFC home finance limited has collaborated with Bankbazaar.com offering lucrative interest rates for housing loans with instant approval and quick online submission.

Home Loan Eligibility:  

Home loans from HDFC home finance limited and Bankbazaar.com are available for both salaried and self employed individuals having a decent loan repayment capacity. Housing loans are available for both Indian citizens as well as NRIs between the ages of 21 years to 65 years. The individual filling for a housing loan must have a good credit score from CIBIL. BankBazaar.com offers a housing loan eligibility calculator tool allowing users to check for their eligibility criteria for home loans.  The amount of home loan that can be availed depends on the cost of the property. HDFC home finance offers a home loan to the tune of 80% of property value in case of loans less than Rs. 20 Lakhs and up to 85% of the property value in case of loans higher than Rs. 20 Lakhs.

Documents Required for HDFC Home Loan: 

HDFC home finance requires basic documentation check before housing loan approval. The documents required for HDFC home loans include the following:

·         Duly application form with latest photograph,

·         Address and identity proof,

·         Latest salary slip for salaried individuals

·         Proof of business for self employed individuals.

·         Salaried persons also need to submit form 16 with their latest salary slip.

·         Self employed individuals must submit their business profile for housing loan approval.

·         Self-employed individuals would be required to submit income tax returns both for self and business for the last three years.

·         Both salaried and self employed home loan borrowers need to submit their last six months bank statement. 

·         Self employed individuals must attach bank statement for both self and business.

·         Processing fee is taken through cheque that must be submitted along with the home loan application form.

Ever Reliable Banks with Impressive Home Loan Interest Rates and Advantage for Home Owners

Buying a home is once in a lifetime opportunity for a large majority of people. Due to easy availability of home loans, a vast majority of people have finally cherished their long pending dream of owning a house. While home loans are now a common financial instrument offered by virtually all private and public sector banks, some banks continue to be the proffered choice amongst users due to their easy loan approval process, lower interest rates and no hidden charges. A home loan applicant is recommended to always compare home loan quotes from multiple banks before selecting the best suitable bank for his or her home loan. Let us look at some of the reliable and popular banks with impressive home loan interest rates and an overall positive track record.

Five Reliable and Popular Home Loan Banks: 

Public sector banks are largely preferred when it comes to home loans as they offer slightly lower rate of interest. However the slow approval rate and sluggish nature of work in public sector banks usually make people embrace Non-banking financial companies and popular private sector banks who are known for their quick loan approval process and professional dealing. Here is a list of the top five reliance banks and non banking financial companies that users prefer when it comes to applying for home loans.

State Bank of India: 

State Bank of India popularly known as the SBI is the largest public sector bank of the country and one of the popular banks when it comes to home loans. Although the heavy rush of home loan applications and slow loan approval system can sometimes mean a longer waiting period for loan approval, lucrative interest rates makes SBI a popular choice with home loan borrowers. State Bank of India charges a minimal processing fee of Rs 1000 or 0.25% of the loan amount for loans up to Rs. 2 Lakhs. For loans between Rs. 25 Lakhs to Rs. 75 Lakhs, the bank charges a flat processing fee of Rs 6500. Loans higher than Rs. 75 Lakhs come with a loan processing fee of Rs. 10,000.

LIC Housing Finance: 

If any non banking financial company comes close to public sector banks in terms of home loan popularity, LIC Housing Finance tops the list. One of the unique advantages of LIC Housing Finance is the option of having a fixed interest rate for a period of five years. LIC Housing Finance offers a discount of 0.25% on home loan interest rates in case the borrower has an insurance or investment policy with LIC more than Rs 15 Lakhs.

Axis Bank:

Axis Bank is a popular choice for home loans due to its zero pre payment charges and quick loan approval mechanism. Axis Bank also charges quite competitive loan processing charges which are up 1% of the total loan amount of a minimum of Rs. 10,000.

HDFC Bank: 

HDFC bank is a popular choice for home loans for private sector banks. HDFC bank has been a pioneer in the home loan market and has active tie ups with good and respectable builders across the length and breadth of India. HDFC bank charges 0.5% f the loan amount towards processing fee charges excluding cess and service tax.
Click here to know more on home loan provided by HDFC Bank

Punjab National Bank: 

Punjab national bank is a popular public sector bank offering lucrative home loan interest rates. A large number of people are still biased towards public sector banks when it comes to home loans and roughly so as public sector banks offer slightly lower rate of interest and lower loan approval charges. Punjab National Bank charges 0.5% of the loan amount towards loan processing charges for home loan up to Rs 3 crore.

Axis Bank Home Loan EMI Waiver Scheme

Axis Bank Home Loan EMI Waiver Scheme

With the aim of refraining its home loan customers from making a switch to other mortgage lenders that offer better deals on the table and increasing its overall home loan business by attracting new customers, Axis Bank came up with a new scheme labelled as ‘Happy Ending Home Loan’. Under the new Axis Home Loan product, the bank promises to waive off 12 EMI’s (equated monthly instalments) if a new borrower sticks with the bank for a period of 15 years, under a new floating rate option having a full tenure of 20 years or more.

Happy Aspects of the Happy Ending Home Loan

Axis Bank, ranked as the third largest private sector banking institution in India, has placed its bet for increasing the Axis Home Loan business on its relatively new and unique scheme, characterized by its inbuilt EMI waiver option.  As long as the borrowers service their EMI’s on time, the bank will waive off the EMIs of the last 12 months of the home loan tenure. Moreover, similar to the regular Axis Bank home loan products, Happy Ending loans are also backed by zero prepayment penalty.

As of now, this unique scheme is available at the same interest rates as the regular Axis Bank Home Loan Interest Rates and would only be applicable for new home loan customers opting for floating rates of interest. The EMI waiver is basically offered to all new home loans that have a minimum tenure of 20 years and have completed a period of 15 years with Axis Bank. Every customer, who has serviced the EMIs on time for this 15 year period, will be automatically entitled to receive the waiver benefit.

Whom will it actually make Happy?

Customers, before opting for the Happy Ending Home Loan, must look into the fine print of the scheme to avoid any unwanted difficulties later on. Instead of measuring this product on the scale of future benefits, one should ideally look into the present state. Interest rates are something that tend to take unexpected turns at any point of time in the future. Nobody can really apprehend their movement and know the direction of their movement way in advance. This is the reason why many Axis Home Loan customers prepay their debt before reaching the actual closure date. According to a statement of Axis Bank executive, borrowers prepay their home loans within the first 8-10 years of the actual tenure. In such a case, where repayment is made before the expiry of 15 years, opting for Happy Ending home loans wouldn't be a wise option. However, the borrowers planning on sticking with the bank for 15 years or more can choose to go with the unique Axis Home Loan product and reap its benefits.

The Final Word

This exclusive EMI waiver scheme is a perfect product from the bank’s perspective in terms of retaining old customers with a good repayment record as well as attracting new home loan seekers. However, from the customers’ point of view, this might be a good option if the accelerating rates of interest are not a concern and they plan on taking their loan up to its closure date.