HDFC Forays into Home Equity Business

July 19, 2007: HDFC, the country’s largest housing finance company, has made a quantum jump in the home equity business by offering housing loans against property at 13.25%. It can result into nice prospects for the lender since several borrowers opt for pre-pay home loans.

Getting the finance through home equity brings a number of advantages on hand especially the easy repayments schedule being the biggest convenience. HDFC envisages getting large request for the product from the borrowers who have cleared their mortgage dues. However, the loan will only be available to existing borrowers, if the market value of the property is high than the outstanding home loan.

Asset Plus is not a new concept but it has just been restructured in a different manner, and focuses at assisting customers to cater their immediate financial requirements while they continue to occupy their residential property.

Considering the benefits of Asset Plus over personal loans, the interest rate on Asset Plus is lower and the tenure is much longer. This offers borrowers an option of spreading the loan repayment over a long term thereby reducing the immediate burden and need to break bank.

Asset Plus Loans will be available at an interest rate of 13.25% on floating rate loans and the tenure against residential premises is 15 years. Contrary to this, the tenure for non residential property is 10 years, subject to the age of customers.

As far as the eligibility criterion for Asset Plus Loans is concerned, the property requires being freehold, self owned, and totally constructed along with a marketable title.

Home Equity Loans are a budding concept in India and a well established in the developed countries such as the US.

Source: Economic Times