LIC Housing Finance launched New Home Loan Product, Freedom on a Floating Rate Basis

LIC Housing Finance on 4 May 2011 launched a new floating rate scheme, Freedom under which the company will offer home loans at 300-385 basis points below its prime lending rate (PLR).

Under the ‘Freedom' scheme, the housing finance company (HFC) will give home loans up Rs 30 lakh at the current PLR (13.75 per cent) less 385 basis points, that is, at 9.90 per cent. (100 basis points equals one percentage point). Home loans above Rs 30 lakh and less than 75 lakh will be available under the scheme at PLR less 340 basis points, that is, 10.35 per cent. Loans above Rs 75 lakh and up to Rs 1.50 crore will be available at PLR less 300 basis points, that is, 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. Also customers can exercise this option only once, within one year of availing the scheme.

This is a pure floating rate home loan product offering. The scheme has also embedded benefits such as allowing customers a one-time option within a year of obtaining the loan to convert to a fixed rate for the next five years, subject to terms and conditions.

The withdrawal of the Advantage-5 product launched in July 2010 was also announced. Under this scheme, home loan rates were fixed at 9.25 per cent for five years and thereafter they turned floating rate.

LIC Housing Finance Ltd is among the top three housing finance companies in India, with a network of 205 offices across the country and representative offices at Dubai & Kuwait. LIC Housing Finance Ltd was promoted by Life Insurance Corporation in 1989.