LIC Housing Finance has tied up with India Mortgage Guarantee Corporation (IMGC) to provide home loans that can be repaid up to the age of 75. IMGC will provide insurance against any loan default, the daily said.
The partnership with IMGC will enable the mortgage lender 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,” said LICHFL MD & CEO Vinay Sah.
IMGC will secure repayment of 20% of the outstanding loan for a small premium ranging between 0.9% to 1.5% of the loan amount, which will have to be borne by the borrower and will be adjusted in EMI. This insurance will be enough to cover six EMIs, which is enough for the lender to realise value without losing any money in case of a default by the borrower, the publication mentioned.
With this new product, LIC will be able to increase its market penetration as it can now cater to more borrowers and ease restrictions on the profile of applicants, who face rejections related to work profile, workplace and credit history, among other reasons that may be unspecified by lending institutions, Sah told.