A guarantee cover firm has been launched by the India Mortgage Guarantee Corporation (IMGC), to widen the reach of Pradhan Mantri Awas Yojana. Mortgage cover for PMAY will lower the level of risks in the bookings of the lenders.
With the help of this product, the homebuyers under PMAY can extend their term of loan to 30 years. Moreover, they can also get an extension of 7 years beyond their retirement age.
Hope is that the step will be a help in achieving the vision of “Housing for All” by 2022.
The IMGC has guaranteed to cover the first loss up to 20% of the outstanding principal balance. This implies paying the EMIs to the maximum coverage, when the account happens to be a non-performing asset.
The main motive behind this proposal was to augment the subsidy on the interest which is provided to the homebuyers but at the same time provide the needed support to the lenders too. This will make it a beneficial proposition for both the parties, buyers and lenders.
This product will be offered under a standardized program for lenders. IMGC is presently in collaboration with two banks and four Housing Finance Companies (HFCs). It also guarantees for 10000 retails loans across the buyers all over the country.
Construction of about 16 lakhs affordable and budget homes has been approved by the government under PMAY, with an investment of about Rs.90000 crores.
A mortgage guarantee for home is the product which compensates and covers the losses if a homebuyer is unable to pay back the home loan in time.
If this product is opted with the home loan then it helps in increasing the affordability for the buyers through bigger loan.