May 17, 2024

LIC Housing Finance

LIC Housing Finance Limited (LICHFL) operates as a housing finance company. They offer long term finance solutions for house/flat purchases or construction. Serving salaried individuals as well as professionals, LICHFL offers balance transfer and takeover facilities for home loans they provide long term finance for.

The Company benefits from the brand identity and diverse funding profile of its parent. Being able to raise funds from both sources supports lower risks.

House Building Advance Scheme

The House Building Advance Scheme gives central government employees the chance to build or purchase their dream home through membership of cooperative group housing societies or their own plot of land. This scheme is available both to single and married employees alike.

This scheme was established as a welfare measure in 1956 by the Ministry of Urban Development, who are also responsible for administering it and creating its rules and regulations.

HBA loans now range between Rs 25 lakh and Rs 50 lakh and can be taken out by both single and married central government employees. Interest on advances are calculated based on 10-year government bond yields and revised every three years to reduce borrowing costs, helping these employees build better homes faster.

Line of Credit Scheme

As interest rates have stabilised and inflation remains moderate, it makes sense to invest in fixed income instruments. LIC Housing Finance offers various deposit schemes with competitive interest rates; home loans to salaried employees, self-employed people, pensioners and NRIs as well as plot loans, home improvement/extension loans, top up loans, refinancing options and commercial space financing services are available.

Credit scoring processes for LIC home loans are similar to other banks and NBFCs; however, their own score will determine whether you qualify for one; those with excellent credit ratings can enjoy extended repayment terms and lower interest rates.

Payment of EMIs may be made either through Standing Instruction (SI) or Electronic Clearance System (ECS), with ECS generally preferred due to being less likely to incur errors. Post-dated cheques can also be submitted, however for faster processing and no delays in repaying your debt, ECS or SI payments are advised for faster repayments.

Plot Purchase Advance Scheme

Plot loans can be an ideal way of purchasing land for residential or commercial purposes. While the application process varies from lender to lender, in general it will involve credit checks and proof of income verification as part of its eligibility criteria. Furthermore, maximum funding and loan repayment terms vary between them and between salaried individuals and self-employed individuals.

The amount available for a plot loan varies based on its value; typically 75% of purchase or estimated construction cost is covered in total funding. Maximum funding typically falls short of that for home loans due to tax exemption issues for plot loans’ interest charges; applicants should also be mindful that any secured property purchased can increase risk of foreclosure; documentation including an original land title deed, plot plan layout plan and no-encumbrance certificate will likely be needed before approval can be given for funding purposes.

Employee Housing Advance Scheme

Employee Housing Advance Scheme allows nasfund Members to purchase/build homes at simple interest rate terms with the Employee Housing Advance Scheme (HBA), making the option available to permanent and temporary employees with at least 10 years of service and whether individually or jointly. HBA may be applied for by employees and their spouses jointly or individually.

An employee of the central government may borrow up to 34 months’ basic salary or Rs 25 lakh (whichever is lesser ) towards building or purchasing a new house; subject to certain conditions this loan may also be used to extend an existing one.

Every three years, the interest rate is reviewed and any subsequent payments based on any changes will reflect them. Slabs ranging from 6% to 9.5% of interest have been eliminated. Furthermore, second charge mortgage loans now fall under this scheme as well as increasing loan limits from Rs 1 crore previously to Rs 10 lakh now for house extensions.

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