How the mortgage guarantee for homebuyers under Pradhan Mantri Awas Yojana works
India Mortgage Guarantee Corp (IMGC) plans to launch a new scheme targeted at borrowers looking to buy a house under the Pradhan Mantri Awas Yojana. The scheme will enhance the eligibility of potential borrowers both in terms of the loan amount and tenure.
IMGC is India’s first mortgage guarantee company. A joint venture between the National Housing Bank, Asian Development Bank, International Finance Corp and Genworth Inc, IMGC’s loan portfolio stands at around ₹2,000 crore. IMGC provides mortgage guarantee to associated lenders. At present, it has tieups with six lenders, including ICICI Bank Ltd, Bank of Baroda, Diwan Housing Finance Ltd and Aditya Birla Finance. A mortgage guarantee acts as a shield against potential defaults, reducing the loan exposure and credit risk for the lender. It is available for loan amounts above ₹5 lakh. The intention of mortgage guarantee-backed home loans is to mitigate the lenders’ risk. The lenders, in turn, are able to provide better terms to homebuyers. “It allows borrowers to enhance loan eligibility amount by up to 20% and extend the repayment period by up to 7 years post-retirement and in some cases up to the age of 75 years,” said Amitava Mehra, CEO, IMGC. The company charges a onetime fee on the total loan amount for the mortgage guarantee. For salaried individuals, the fee varies between 80 basis points and 165 basis points (One basis point is one hundredth of a percentage point); for the self-employed it is 10-15 basis points higher than for salaried individuals. It varies, based on the loan-tovalue ratio, risk criteria, loan amount and so on. For instance, if a salaried individual takes a ₹25-lakh loan with a mortgage guarantee, she may need to pay between ₹ 20,000 and ₹41,250 one-time fee. In case your home loan eligibility is falling short of the requirement, you can request associated lenders of IMGC to process your home loan with a mortgage guarantee. When you put in such a request, IMGC assesses the home loan application and determines the amount of loan the applicant is eligible for, which in turn reflects in the final approved loan amount and the loan repayment tenure. “For those who are planning to buy a home under PMGY on loan, we will have standard agreements, policy, uniform pricing and process, making it easier for the borrower,” said Mehra. You can also check your home loan eligibility online on www.imgc.com.