Salient
Features of “Freedom” Scheme
Friends, This is a unique scheme by
itself where in You have a Freedom to convert your Floating Rate Loan to 5 Year Fix, once the floating rates will
become less/ low than the present high
floating rates. You will be induced by lowering rates to think whether you can
fix them for certain number
of years? Though may not be for entire tenure of your loan. YES ! YOU CAN DO
THIS , IF YOU ARE WITH US & this is the difference
between us and other Home Loan companies or banks..
We are expecting that the home loan rates will
fall say within next couple of months. We know, every other banks or FI’s rates
will also fall, along with us. But with
LIC HFL you have freedom
to utilize these Lower Rates to Max. Benefits of yours; BY OPTING FOR CONVERSION TO 5 YEAR
FIX REGIME.
The formula for arriving at 5 year Fix Rate is to
add 0.85% or 0.75% as the case
may be to your existing floating rate.( At the time of your decision) If your loan
is up to 30.00 lakhs then add 0.85% or if loan is between 30 to 75 lakhs then
you will add 0.75% to your the then floating rate; to arrive at exact five year fix rate for
you.
Now you also have A Freedom to not to
opt for conversion, if you wish to continue in floating rates. But if you wish
to convert then the
decision you will have to take WITHIN ONE YEAR from the date of first payment
to your builder.
Another important point to note in
your favour; is LICHFL will not charge any penalty if you want to fore-close this loan by transferring
it to any other bank. I think
this a real advantage to you & may come very handy to you once you are back
in our floating rates after expiry of FIVE YEARS FIX RATE REGIME. Here if you
feel that our rates are costlier than other banks; you may transfer this loan
to any other bank.I know for sure that this possibility is very remote. But
still we have given you this facility.
With other banks, they do charge penalty
of at least 2% if you wish to close
their loans by transferring it to some other bank
I wish to explain Here, about How any
Non Banking Financial Institute arrives at their floating rates?
The simple formula is PLR (of the
bank/Institute) Minus
The Discount given on it.
The Floating Rate =PLR Less Discount. This Discount is also called as Spread Or Margin by many. Our present floating rate for loans up to Rs.30.00 lakhs is 10.80 with PLR BEING 14.40% & DISCOUNT ON IT BEING 3.60% . The discount is permanent but PLR changes as per RBI polices. Therefore the answer (APPLICABLE RATE OF INT.) is always floating from time to time.
The Floating Rate =PLR Less Discount. This Discount is also called as Spread Or Margin by many. Our present floating rate for loans up to Rs.30.00 lakhs is 10.80 with PLR BEING 14.40% & DISCOUNT ON IT BEING 3.60% . The discount is permanent but PLR changes as per RBI polices. Therefore the answer (APPLICABLE RATE OF INT.) is always floating from time to time.
In this freedom scheme we have
declared your discount on PLR which will remain fix for your entire Loan term. In
other words when you will come back to Floating after 5 year fix rate period,
you would then know exactly, what is your Floating? This is the beauty of this scheme. Other banks or FI’s
with their many so called attractive fix rate schemes; do not declare their
discounts on PLR Which shall be applicable once their fix rate period gets
over. We can give you the actual example of One leading largest bank in India,
which was offering Housing loans at pretty less than the prevailing rates of
other banks, is now charging 12.50% as floating rate to their Fixed Rate
Customers, as those customers fixed rate period of 2 Years is over.
Fourth point is, LIC HFL’s
predication about home loan interest rates are almost accurate. If We feel the
rates will come down in next 12 months, they will . To stress this point I
would like to give factual illustration of our ‘Fix O floaty’ Scheme Which was
launched in 2009. It was at just 8.90% fixed for 3 years offering , & other
banks were offering pretty much less rates than ours for their one & two
year fix Rate schemes. The particular largest bank in India was offering 8.25% Fix
for first year & 8.50% for 2nd year here, but for third year
onwards their discount was not declared in advance.
Many our would be customers use to compare & argue with us as
following:-
Particulars
|
The largest bank
|
LICHFL
|
1st year
|
8.25
|
8.90
|
2nd year
|
8.50
|
8.90
|
Overall Total for Two years
|
16.75
|
17.80
|
Though this comparison is not correct
as our scheme was for three years & theirs was for two years only, for
first two years naturally we were
costlier by 1.05% . But now the same customers are paying 12.50% for their
third year and our customer are paying 8.90% even in third year. Therefore if
you see the following factual Table , you would understand as to who was Right?
The Largest Bank LIC HFL
Y
|
1st Fixed
|
8.25
|
8.90
|
E
|
2nd Fixed
|
8.50
|
For 3 Years Fix
|
AR
|
3rd FLOATING
|
12.50
|
Only Fixed as Above
|
Total
|
29.25
|
26.70
|
Now they have proved to be 2.55% costlier than us in third year itself.
Therefore if we feel that the present
high interest rates will come down within next one year; we mean it.
Therefore please do not be a Looser by opting for lower floating interest rates being
offered by other banks. Ultimately You will not have the freedom of
converting your floating rates, when you desire, to five year fix rate.
Other few important points on which
you shall ponder are:
- Our rates have risen only 4 times & not 12 to 13 times like other Banks. We are pretty slow in increasing interest rates but very competitive when the rates start lowering.
- LIC is our promoter company, which is 100% owned by government and a very big investor in almost all blue-chip corporates including Govt. Enterprises. Big scale financer to RBI & central government too. They are also participant investors in a big way to almost all segments of Indian economy. Hence they can understand, feel & sense the direction of Indian economy better than any other financial experts, anywhere in the world. So while designing our interest schemes this knowledge & insight comes handy.
- Therefore if we feel that the rates will be low, we mean it.
- We are very cost effective, as we do not charge any other fees than processing fees.
- You can start full EMI even for under construction projects. No need to wait till you get possession. This is very best option as it reduces your term loan term considerably, hence your overall interest outgo or xpenses incurred on maintaining housing loan are minimized with us.
- No penalty on partial prepayment, Pre-closure or loan transfer
- No charges for any statements.
- Open sanction even without selection of your property .
- Two brothers can take jointly
- For deciding loan term, if you are a govt. employee & presently working with them, then your Pensionable period is considered, but will have to give one proper guarantor
- Our sanction is valid for total 180 days of which first phase of 90 days, it is with the scheme in which sanction is given, & next 90 days are available after revalidation but only with the scheme available at the time of revalidation. No bank gives sanction for such a long period
- Last but not the least point is, if you compare current floating rates of 3 year old customers of any other leading bank then they are much higher than us
Current interest rates of
3 year old customers.
LICHFL
|
SBI
|
HDFC
|
11.40% To 11.90%
|
12.5%
|
13.50%
to 15.50%
|
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