LIC Housing Finance reduces interest rates to all-time low; all you need to know

India's leading housing finance mortgage loan firm LIC Housing Finance Ltd (LICHFL) reduced home loan interest rates to an all-time low on Wednesday. The mortgage lender said that there will be a rate of interest of 6.90 per cent for a borrower seeking loans up to Rs 50 lakh and having a CIBIL score of 700 and above.

Buyers, seeking a home loan of above Rs 50 lakh will have to pay an interest rate of 7 per cent, the firm added.

"Home loan interest rates are at an all-time low for the company and thereby resulting in low EMI payment. Attractive price points and affordable EMI will aid in addressing the demand side for buying homes," LICHFL Managing Director and Chief Executive Officer (CEO) Siddhartha Mohanty said.

Mohanty said there has been a softening of the cost of funds after a reduction in repo rates by Reserve Bank of India (RBI) in recent months. The company's cost of funds currently stands at around 5.6 per cent.

The RBI had cut the repo rate by 40 basis points (bps) to 4 percent and reduced the reverse repo rate by 40 bps to 3.35 percent in its last monetary policy meeting. One basis point is one-hundredth of a percentage point.

LIC Housing Finance also launched a special home loan product, Griha Varishtha yesterday. The product caters to retired or serving employees of PSU insurers, Central/state government, railways, among others entitled to a pension under Defined Benefit Pension Scheme.

The tenure is till attainment of 80 years of age or maximum up to 30 years. Griha Varishtha scheme offers six EMIs waiver for customers going for ready to move units or 48 months moratorium period for purchase of under-construction units.

For higher loan eligibility, the applicant can also jointly apply with their earning children.

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