Nowadays, home loans come tagged with property insurance and most people prefer it that way. Banks are also comfortable with this trend have come forward to lend finance to pay the insurance premium. Home insurance or property insurance offers a safety net which has become important in the context of people going for bigger loans because of the unprecedented increase in property rates. Borrowers as well as banks do not want to take chances.
When a borrower takes home insurance, he can be sure that banks would not pounce on his family if he dies before repaying the loan. Also, in case of fire, theft and damage to property in natural calamities, the borrower gets compensation from insurance companies. Banks which sometimes face difficulty in recovering the loan amount from dependents, are now advising applicants to go for prope5B3rty insurance. The banks usually pay the premium themselves and adjust it in the monthly installments being paid by the borrower.
If the loan amount is Rs 20 lakh, the one time premium would come to around Rs 1 lakh. Banks are keen on applicants going for one -time premium. "Property insurance provides financial security to the family since in the end they get back the home loan paid to the bank," said Mr K. Murali Krishna, a senior executive of Andhra Bank. In fact, banks are vying with one another in coming out with customer-friendly packages to attract prospective home-buyers.
Some banks are offering free home insurance with loans. "Our bank will pay the insurance premium," said Mr A. Devender, relationship manager in the home loans wing of Axis Bank. "So, it is not a burden for prospective home-buyers." Other banks provide home loans along with medical insurance. The premium of the medical insurance is around Rs 5,000 but comes down to Rs 3,000 if taken along with home insurance.
Mahendra Varma has 3 years experience in writing articles; he is currently working as web analyst in http://www.maaproperties.com
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