Non banking finance company (NBFC), Edelweiss Housing Finance Ltd is planning to come up with a new home loan scheme which will allow the entire property value to be taken as home loan without any downpayment needed to be made by the borrower.
The amount which conventionally needs to be given as downpayment by the borrower can be given to the company in terms of collateral like shares, mutual funds, debentures etc. After deciding on a margin out of this collateral, almost the entire home loan would be given out to the borrower.
The company has sought approval of the product from the housing finance regulator. "This has worked overseas and there is no reason why it will not work in India. We will approach the housing finance regulator for permission to launch the product," said the company's executive vice president, Mr Anil Kothuri.
"The plain-vanilla home loan ends up destroying one asset to create another. The product that we are envisaging will give the borrower the ability to preserve whatever savings he has and also enjoy the appreciation on that," he said.
"For somebody who invests in shares and mutual funds, the product that we are proposing to launch will be attractive as it preserves his savings, gets him a higher loan, and interest can be set-off for tax to some extent," said Mr Kothuri.