Edelweiss Housing Finance Ltd is likely to introduce a home loan without having to liquidate your lifetime savings for the down payment.
According to reports, if a person wants to buy a property worth Rs one crore, then instead of liquidating your investments to make the down payment of Rs 20 lakh you can give your investment in shares and mutual funds, worth say Rs 25-30 lakh, as collateral to the lender. The lender will carve out a margin out of this investment portfolio and lend you up to 100 per cent of the value of the property.
Mr. Anil Kothuri, Executive Vice-President, Edelweiss Housing Finance said that the plain-vanilla home loan ends up destroying one asset to create another and that the product will give the borrower the ability to preserve whatever savings he has and also enjoy the appreciation on that.
He said that the company has planned to approach the housing finance regulator for permission to launch the product.
Mr. Anil said that for somebody who invests in shares and mutual funds, the product offered will be attractive as it preserves his savings, gets a higher loan, and interest can be set-off for tax to some extent the home loan installment will gradually become constant, the stocks appreciate, and the property will appreciate.
If the value of a borrower’s investment portfolio depreciates then the lender could call for topping-up the portfolio.