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Mumbai:
Axis Bank, India’s third largest private sector lender, on Wednesday launched a home loan product with a built-in EMI waiver scheme, under which the bank will write off the last 12 installments if the customer stays with it for at least 15 years.

However, the bank is not offering any discounted interest rates to this product.

"The product, called ’Happy Ending Home Loan’, is being offered at the same rates as a regular loan and will be applicable to new customers under the floating rate option. The EMI waiver will be offered to all loans with an initial tenure of 20 years or more that cross their 15th year," the bank said in a statement.

The new product, available to new customers, offers to waive 12 EMIs for those borrowers with a 15-year or more tenure and if he/she pays the EMIs on time.

When contacted, consumer lending and payments head Jairam Sridharan said: "The new product is our way of rewarding customer who pay their EMIs on time."

When asked whether the scheme is open to existing customers, he said it is targeted at new customers, but existing borrowers can avail it provided they go through a process of reapplying for the loan, which would cost them the currently existing processing fee.

On the benefit side, Sridharan said that for a customer taking a home loan for Rs. 50 lakh at 11 per cent floating rate, the EMI per lakh of loan size will be Rs. 1,032. For a customer taking a ’Happy Ending Home Loan’, the EMI waiver will be worth up to Rs. 6.19 lakh.

When asked about the rationale of the scheme, he said customers are increasingly opting for longer-tenure home loans.

"Unlike in the past, today more and more home loan borrowers are young and they are opting for 20-25 years tenure with closing the loan at the earliest not being a priority. This is partly due to the high interest rates and high home prices and partly due to the age profile of the new home
buyers," Sridharan said.

"Any customer, who pays EMIs on time will be automatically eligible for the benefit. As with the standard Axis Bank home loan, the new scheme will come with zero pre-payment penalty," the bank said.

Axis Bank, with 1,674 branches and 10,337 ATMs across 1,080 cities and towns, has doubled its home loan book in the past two years. Its home loan book stood at over Rs. 30,000 crore at the end of the June quarter, Sridharan said.