LIC Housing Finance (LICHFL) is now offering home loans that can be repaid up to the age of 75. This follows a partnership between the housing finance company and India Mortgage Guarantee Corporation (IMGC), which provides insurance against defaults.
LICHFL MD & CEO Vinay Sah said that the partnership with IMGC would enable the housing finance firm to provide long-term loans to borrowers who are not salaried. “It will also enable us to provide mortgages with higher loan-to-value ratios.”
For the payment of a small premium, the IMGC will guarantee repayment of 20% of the outstanding loan. At the least, it will be enough to cover six Equated Monthly instalments (EMIs). This will give enough time to the lender to realise value from the house without losing any money. The one-time premium will range from 0.9% to 1.5% of the loan and will have to be borne by the borrower and adjusted in the EMI.
According to Sah, LICHFL will be able to increase market penetration as it will be able to accommodate more borrowers and ease restrictions on profile of applicants, who face rejection related to work profile, workplace and credit history, among other reasons that may be unspecified by lending institutions.
IMGC CEO Mahesh Misra said, “The housing finance industry is currently going through interesting times and large, stable lenders like LICHFL are ideally poised to leverage this opportunity. We are confident of scaling up this partnership significantly in a short time span.”