Axis Bank Will Waive Home Loan EMIs For Timely Repayment
The product is largely aimed at customers from low income groups looking to buy their first house.
Axis Bank, on Thursday, launched an affordable housing loan product, Shubh Aarambh, to incentivise borrowers who made timely repayments.
The bank will waive off 12 monthly installments from a customer’s repayment schedule in three tranches, the bank said in a statement on Thursday. At the end of the fourth, eighth and twelfth year of the loan’s tenure, the bank will remove four equated monthly installments (EMIs), it added. This offer will be available, at no extra cost, to borrowers who have taken a home loan worth up to Rs 30 lakh for a tenure of 20 years. The only condition for the incentive – a good repayment record.
Axis Bank, in May, had reduced the interest rate on home loans worth up to Rs 30 lakh to 8.35 percent per annum from 8.65 percent earlier. According to the bank’s statement, a customer who took a Rs 30 lakh loan for a 20 year tenure at an average interest of 8.35 percent would save up to Rs 3,09 lakh under the scheme.
According to Rajiv Anand, executive director at Axis Bank, the new affordable housing loan product is largely aimed at customers from low income groups who are looking to buy their first house but is not limited to any customer group.
Balance transfers in case of loans approved by other banks and then taken over by Axis Bank would also be eligible under the Shubh Aarambh scheme as long as the case meets the criteria laid above, he added.
The bank already offers home loans up to Rs 28 lakh to customers in the low income group under its Asha home loan scheme since April 2014. The affordable housing loan segment forms nearly 4-5 percent of the Rs 74,000 crore home loan portfolio of the bank, Anand said.
According to our internal estimates, we see this product adding about Rs 4,000 crore to our home loan portfolio in one yearRajiv Anand, Executive Director, Axis Bank
Quality of the home loan portfolio has been quite stable and shows no signs of stress, Anand added. “If you see the way this product has been structured, it is inducing better behaviour. As you continue to pay your EMI, you get the benefits. The day you turn delinquent, all bets are off,” he said.
The bank will not charge a prepayment penalty from customers who want to close their loan account before the 20-year tenure ends.