It's a bonanza for home loan seekers. The Union Bank of India is offering a repayment moratorium of up to 18 months for loans taken for a second house, IDBI Bank is providing loans up to 110 per cent of the property value, and the State Bank of India will pass on lower interest rates to all existing floating rate loans.

The new rates of interest will be 9 per cent for home loans of up to 10-year tenure and 9.5 per cent for loans above 10 years. The new rates of interest will be effective from April 1. Earlier, the bank had three slabs of floating rate loans, and old borrowers were not getting the benefit of rate cuts.

The Union Bank's move essentially gives a person time to sell his house before buying a new one. "Normally, if one wants to upgrade to a bigger house, it is difficult unless the old property is sold. Otherwise, one has to service two loans simultaneously. The moratorium will ease this problem," said a banker.

The customer has an option of disposing his existing house within an year and sale proceeds of the first flat will have to be deposited in the loan account. The equated monthly instalment will be set on the balance amount outstanding in the account.

As per its new home loan scheme, IDBI Bank will provide financial assistance for the full property value, stamp duty, registration and amenities like car parking, club membership, additional fittings and fixtures.

It is also offering an additional 10 per cent as a personal loan to customers to furnish their homes.

"Our survey shows that customers normally take two to three loans other than the home loans. These loans are soft loans from friends, relatives, employers and sometimes banks," Anil K Sachidand, IDBI Bank's product and sales head (mortgages), said.

In order to safeguard itself, the bank is also taking an insurance cover for loss of employment, which will cover three instalments. The cover is provided by Bajaj Allianz.

Housing finance companies normally offer loans only 80-90 per cent of the  property value. The remaining amount has to be brought in as margin money.

"At the end of the first year, the customer will have paid back 5 per cent of the loan amount. Even though there will be no margin money, the repayment will bring down the risk to the bank," added Sachidand.

The IDBI Bank offer is valid only for 90 days.

House warming

• Union Bank is offering a repayment moratorium of up to 18 months for home loans taken for a second house.
• IDBI Bank has launched a scheme for home loans up to 110 per cent of the property value.
• SBI to pass on the lower interest rates to customers who have availed of floating rate loans.

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