State Bank of India has launched its “SBI FlexiPay Home Loan” aimed at youngsters with a rising income. The loan allows takers the option of only paying the interest on the loan for the first years. SBI said that it is not offering any discount in interest rates or offering more loan to value.
“We are offering this loan on the premise that youngsters will initially find it tough to pay monthly instalments. So once their career stabilizes, which could be before or even at the end of the five-year period, they can start paying regular EMIs. With every three years after we’ll increase the EMI by 5% so that the person is well-able to chart out his financial growth,” said SBI chief general manager Ramesh Babu at its Chennai launch.
The bank said in a statement that the new offering will enable young working professionals to get higher loan amount compared to their loan eligibility under normal home loan schemes.
Rajnish Kumar, managing director, SBI, said in doing so the bank will not dilute the prescribed loan-to-value (LTV) ratio. “This product cannot be called teaser loan as we have taken adequate safeguards like making it available only for salaried professionals and not for all categories of customers.”
Targeted at the salaried-class, the interest rate is currently 9.55% – with women applicants having to pay a lower interest of 9.50%. The loan also has an additional rider in that the candidates gets 20% extra of the loan amount they are eligible for. “Say the person is eligible for a Rs 1 crore loan, then under FlexiPay loan – he can avail of a loan amount of Rs 1.2 crore,” he said. If the applicants wants to close the loan earlier than the time period of 25-30 years, then they can do so without incurring pre-payment charges.