Fund on Cards to Offer Guarantee for Home Loans
Govt move to back borrowers otherwise ineligible due to poor credit rating
New Delhi: The government is considering a fund that will provide guarantees for those who won’t otherwise be eligible for a housing loan, allowing them to borrow funds to acquire a home, said a senior finance ministry official. It’s being envisaged as part of a package being prepared by the government to help the housing sector, which is burdened by heavy debt, stalled projects and unsold homes.
“This fund would essentially support borrowers who are not rated well and not eligible for a loan from a bank,” the official told ET. A guarantee could also help lower interest rates for those otherwise eligible for loans. The government is also examining the feasibility of a stressed asset fund under the package, which will help complete stalled projects. A borrower will be able to avail of the guarantee from the proposed fund for a small fee, the official said. This could aid those without steady income flows and credit histories to become eligible for loans. This segment has traditionally relied on the informal sector for credit that comes at a high cost.
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