Axis springs home loan surprise

Mumbai, Aug. 17: Axis Bank today launched a home loan product that will waive 12 equated monthly instalments (EMIs) during the course of a loan. The relief will be, however, available only to those who are regular in their payments.

Under the “Shubh Aarambh” scheme, the country’s third-largest private bank will waive four EMIs each after the fourth, eighth and 12th year of a loan.

This can help the borrower save Rs 3.09 lakh on a Rs 30-lakh loan taken for 20 years.

The waivers, applicable on loans up to Rs 30 lakh, will be given in the form of reduction in loan tenures, the bank said, adding that the interest rate will stay the same at 8.35 per cent.

However, the borrower should have a clean repayment track record as a single missed EMI will disqualify him from getting the benefit.

This new product from Axis Bank comes at a time the bank is looking to increase its presence in the highly competitive housing finance segment, besides encouraging better credit behaviour.

“Through these products we aim to provide value addition to our customers in a highly competitive environment and at no incremental cost. This will also encourage regular repayments by the customer,” Rajiv Anand, executive director-retail banking of Axis Bank, said while announcing the details of the product.

The loans can be used to purchase an under-construction/ready/resale house, self-construction or even a plot plus construction.

Customers also have the option to transfer an existing home loan to Axis Bank without any additional cost.

During the quarter ended June 30, retail advances at Axis Bank grew 22 per cent over last year to Rs 1,75,278 crore. Home loans accounted for around 44 per cent of the advances.

On whether the current product will impact the net interest margin as the total tenure is coming down, Anand said the bank would benefit from better credit behaviour and longevity of a loan as pre-payments would be less.

Axis Bank already has a special product in affordable housing, called Asha, aimed at the lower income group (loans up to Rs 25 lakh).

At present, Asha loans account for around 5 per cent of its mortgage book.