Recently, LIC Housing Finance launched a new home loan product christened Freedom on a floating rate basis.
An online news portal about business and economy – economictimes.indiatimes.com, writes about it, “Under the scheme, loans upto Rs 30 lakh would be offered at 9.9 per cent, loans between Rs 30-lakh-Rs 75 lakh at 10.35 per cent and loans of Rs 75-lakh-Rs 1.5-crore can be availed at 10.75 per cent.
The scheme will allow customers an option to convert to a fixed rate scheme for five years after the disbursement of the first loan amount. They can exercise this option only once, within one year of availing the scheme.”
Further it writes about the advantage, “The rate would be linked to the prime lending rate, unlike the company’s Advantage-5 scheme that was launched last year, with the lending rate fixed at 9.25 per cent for five years, and after that on a floating rate basis.
The company added that it has withdrawn its Advantage scheme, on concerns that it could be deemed to be a teaser loan rate scheme.”
So, the rate would be linked to the prime lending rate. It is featured with withdrawn advantage scheme. After 5 years, the loan can be converted on floating rate basis.
The news portal quotes a statement of LIC Housing Finance’s Chief Executive Officer, V K Sharma also, “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.”
So, it is a dual rate scheme after five years. It is not a teaser rate scheme. It is as useful as retirement fund of TATA Mutual Fund.
