DECODED: Axis Bank’s Asha Home Loan
Apr 18 2014
PRODUCT FEATURES: The product is targeted towards individuals in the lower income group buying their first house. The minimum combined income of a borrower along with his spouse and children should be at least Rs 8,000. The home loan can be taken for purchasing a ready, under construction, new resale property or for purchasing a plot to construct a house, or for constructing a house. The minimum loan amount is Rs 1 lakh while the maximum loan you can avail is Rs 25 lakh. The minimum saleable area of a house has to be 325 sqft. Both fixed loan and floating rate loan variants are available. A borrower could be salaried or self-employed.
LOAN TENURE: For floating rate home loan, the loan tenure is upto 30 years for salaried and self-employed customers subject to the age of the borrower not exceeding 60 years or 65 years respectively at loan maturity. For fixed rate home loan, the maximum loan tenure is 20 years.
INTEREST RATE: For a floating rate home loan, the interest rate is 10.75 per cent for a salaried customer and 11 per cent for a self-employed customer. For a fixed rate home loan, the interest rate is 11.75 per cent per annum. An important feature is that the fixed rate product does not have a reset clause and therefore the interest remains fixed for the life of the loan.
OTHER CHARGES: The processing fee charge is one per cent of the loan amount subject to minimum Rs 10,000. Noticeably, if you have opted for a fixed rate loan and wish to prepay the loan, the bank would charge you a prepayment penalty of 2 per cent of the outstanding principal/amount prepaid.
LOAN-TO-VALUE RATIO: For loans upto Rs 20 lakh, the loan amount offered is upto 90 per cent of the property value. For loans above Rs 20 lakh and upto Rs 25 lakh, the loan amount offered is 80 per cent of the property value.
DOCUMENTATION: Proof of identity, proof of income, proof of residence and an account statement of the last six months.
FC VERDICT: The product has higher interest rate and high processing fee compared to its peers. Several public sector banks are offering much lower interest rate. For instance, State Bank of India is offering 10.10 per cent (for women) and 10.15 per cent (for males) on loans upto Rs 75 lakh. If you are a low income earner you also need to check whether other banks will even give you a home loan or give you one at rates and charges which are lower than what Axis Bank's Asha Home Loan scheme offers. Compare and decide.
— Falak Naaz Syed