LIC Housing Finance recently announced the launch of its new home loan product – Freedom, which offers loan amounts up to Rs. 1.5 Crores for interest rates as high as 10.75%. An interest rate of 9.9% would be offered for loan amounts up to Rs. 30 Lakh and an interest rate of 10.35% would be offered for loan amounts up to Rs. 75 Lakhs.
While the interest rates will be directly linked to the prime lending rates, customers will also be allowed to convert a fixed rate scheme for 5 years after disbursing their first loan amount. This option can however be exercised during the 1st year only once. With the introduction of this new scheme, LIC Housing Finance withdrew its Advantage scheme, on concerns that it could be deemed to be a teaser loan rate scheme.
According to V.K. Sharma, Chief Executive Officer, “”It was not a teaser rate scheme. It would become a dual rate scheme after five years. We had sought a clarification from the regulator on it being a teaser rate scheme. Since we did not receive any clarification, we decided that it was better to withdraw the product”.