Teaser Home Loans Features And Implications – Know them!!
Teaser home loans are all about the excess liquidity in the market. In this process, finances are provided to the borrowing market to activate the lending market and fuel increased financial activities. It has become a common measure to accelerate the economic growth by offering attractive interest rates and simplified repayment options. Teaser home loans are tempting and attract the home loan seekers in a big way. Sometimes, the lenders also waive the interest rates in order to make these loans more attractive. However, after the prescribed period, the interest rates are brought to the previous rates.
In teaser home loans, the loan seekers are offered a much lower interest rate than the prevailing market rates; however, after some specific time the home loan seeker would have to switch to floating interest rates. As, the market is flush with affordable houses, it is in the interest of lenders to attract more and more buyers by offering them such kind of waivers and discounted interest rates. Teaser home loans are a bargain and as these loans offer tempting interest rates and payment options, most of the lower income segment rushes towards these lenders. You should learn about the LOANX features and options to trade electronically at the platform. Different kinds of loans are available at the platform and you should select the less interest rate. The results are the better one for satisfy the requirements.
Teaser Home Loan Rates Offered by the SBI
However, logically it is not in the interest of lenders to offer home loans at such dirt cheap rates. If they have to remain in the business, they have to find a way to compensate for the initial waiver. That is the reason, in the teaser home loans, the waiver or discount is only for a limited period. Recently, SBI and announced a teaser home loan, in which the borrowers had to pay 8% interest rate in the first year, followed by 9% the next year and onwards. From the fourth year, the interest rate was hiked to 9.25%, provided the value of the property is more than Rs.50 Lakhs. This is how teaser home loans work.
However, the existing home loan customers of SBI complained about this discrimination and discounted rates offered to the new customers. They said that it was not inclusive and they had to pay a higher interest rate as compared to the new customers offered the teaser rates. But, as it is explained above, it is largely to fuel the market and increased the borrowing activity, there is no much difference after one or two years. However, it’s sure that the new customers avail exciting discounts during the honeymoon period.
Banks providing teaser home loans in India
In India State Bank of India, HDFC and National Housing Bank (NHB) offer teaser home loans. These banks offered dual rate home loans in the past few years and the borrowers were allowed to prepay the home loans during the phase in which floating rates were offered, without having to pay any penalty. The National Housing Bank also revised its policy that if a borrower had signed a home loan, in which it was classified as fixed interest rate, would remain a fixed rate home loan. It relieved the home loan customers to a great extent.