BANGALORE: The festival season is here. Navarathri begins in October, followed by Dasara and Diwali. The festive season continues till the end of the year. This period is considered auspicious for new projects, including purchase of property. Banks and housing finance companies make best use of this buoyant phase. Banks are expected to launch special schemes during the season. In the festive season, banks witnesses a growth in retail loans.
With the home loan market being very competitive, banks come up with new products or sweeten their loan products with add-ons, so as to draw prospective borrowers. These addons could be of various nature, some financial and others non-financial. Some banks offer a uniform concession on the interest rate for all housing loans. Some even offer special interest rebates. Then there may be discounts, or even waiver of the processing fee. Another popular offer is immediate sanction of loan or within a limited time of 48 to 72 hours. Some banks offer free personal accident insurance or property insurance.
Another popular offer is providing a loan on a progressive monthly installment scheme, where the borrower’s liability or EMI is based on increase in salary. Hence, the EMI will be lower in first few years and will be regular later. This scheme is especially good for young people who expect their salaries to rise in future.
Another rather new option is a one percent cash payback or waiver of last few EMIs in case all the EMIs are paid on time. The offer is restricted to borrowers who stick for the entire tenure of the loan and do not switch over to another lender in the intervening period.
Prospective borrowers should note that these offers are for a limited period of time only. One needs to understand the terms very well before taking up these offers. For example, the cash back offer may not apply in case of prepayment. One may need to stick to the entire tenure of the loan in order to avail it. Many banks launch combo loan offers, under which a home loan borrower gets a car loan too without having to pay the processing fee. One should explore the market and analyse the interest rates and the cost implications.