ICICI Bank unveils first guarantee-backed home loan product

ICICI Bank, India's largest private sector lender, today launched the country's first mortgage guarantee-backed home loan product that it claims to be more flexible in terms of both amount and tenure.

The new product, called Extraa Home Loan, provides an option to increase the number of installments in case of an expansion in the credit amount, at an additional fee.

Customers can raise the eligible amount by up to 20 per cent and increase the tenure by up to seven years, Chanda Kochhar, MD and CEO of the bank said.

For availing ICICI Bank Extraa Home Loans a customer will have to pay a one-time mortgage guarantee fee at the start.

The fee will depend on the age of the borrower, extension in tenure, the nature of income - whether the person is salaried or self-employed - and the loan-to-value ratio.

However, the fee will not exceed two per cent of overall loan, executive director Rajiv Sabharwal said.

ICICI's Extraa Home Loans has been launched in association with the India Mortgage Guarantee Corporation, which will guarantee the incremental risk, Sabharwal said, adding that it conforms to all regulatory norms.

The product is targeted at middle-aged individuals and the self-employed, he said, adding that such products are popular in the US and Canada.

It is not clear how ICICI bank's Extraa Home Loan will avoid the pitfalls of those over-leveraged property and multiple loans that led to the collapse of American banking system in 2008.

The world is still not out of the effects of the collapse of the global economy with the fall of Lehman Brothers and many other Wall Street titans.