HDFC re-launches teaser loan scheme

Housing finance major HDFC re-introduced a new dual rate home loan scheme, which is available only till the end of April. Under the scheme, the fixed rate will be 8.25% up to March 2011. In the following year (2011-12), the rate will be fixed at 9%. Starting from the third year (2012-13) the scheme will attract the prevailing floating rate for the remainder of the loan's tenure. The floating rates will be applicable under two slabs; for loans up to Rs3mn the rate will be 9% while for loans above Rs3mn the rate will be 9.25%. HDFC also said today that its existing floating rate product would continue without any change where rates are 8.75% for loans up to Rs3mn, 9% for loans between Rs3mn and Rs5mn and 9.25% for loans of more than Rs5mn.

HDFC’s earlier scheme offered home loans at 8.25 per cent fixed for the first two years and thereafter, at the then-prevailing floating rate. The leading home loan provider’s revised scheme was apparently a reaction to State Bank of India (SBI) extending its special scheme till the end of this month. Renu Sud Karnad, managing director, HDFC, said even though there is a marginal increase in interest rate compared with the earlier offer, HDFC's effective rate over a 15-20 year term is very attractive. HDFC said this is a flexible product with dual rates. The fixed rates are applicable for all new loans irrespective of the loan amount. SBI is charging 8% fixed for the first year and 8.5% fixed for the subsequent two years under its special scheme for loans up to Rs5mn.