HDFC has introduced its Asset Plus scheme which offers loans against property at a 13.25% interest rate. Comparing favourably with auto finance and personal loans, HDFC hopes to convert its home loan borrowers who have already cleared their loans to avail of this scheme.

The Asset Plus can be availed even if the borrower’s home loan is not cleared, but the outstanding amount is less than the market value of the property. The Asset Plus carries a double benefit of not having a ceiling on the loan, as in the case of top-up loans which have an upper limit of Rs.5 lakh.

The new scheme is a repackaged version of an earlier scheme, but restructured to meet the financial requirements of customers residing in their own homes.

Interest rates as compared to personal loans are easier, as is the loan period. Asset Plus loans on a floating rate will cost onwards of 13.25%, and the loan term is 15 years on a residential property, while loans against non-residential property can be taken for 10 years.

The quantum of loan a borrower can avail can start from 50% of the market value of the property. The loan amounts could be as much as 70% of the value of the property at very competitive rates.

The borrower, however, can avail the Asset Plus loan only if the property he wishes to pledge is a freehold one, fully constructed and owned by him/her.

Joint properties also qualify for an Asset Plus. HDFC is India’s leading housing finance company, and was in the news last week for breaking its tie-up with Citigroup for cross-selling each other’s financial products.
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