Axis Bank, the third biggest private bank in India, has officially unveiled QuikPay Home Loan which is a unique home loan product that will help customers save more money on interest components of their home loans as per reports. QuikPay home loans will offer a new repayment method where an equal principal component will be repaid by the borrower every month along with interest on the balance outstanding. In place of EMIs, home loan borrowers will be forking out reducing monthly instalments for this purpose.
The initial payments will be higher as compared to EMIs on similar loan amounts for similar tenors and the instalment amount will keep coming down throughout the entire tenor. Axis Bank will however be charging a slightly higher rate of interest for customers at 9.05-9.25% as compared to 8.85-9.05% previously. Since borrowers can lower the principal amount with each repayment, the overall amount paid back will come down and so will overall interest costs.
Axis Bank has stated the burden will go down overall for home loan customers and this novel concept of reducing monthly instalments and major interest savings will be an enticing option for customers. For instance, Axis Bank has mentioned that by the end of the 20th year of a home loan for Rs. 50 lakh, under the present EMI system, borrowers will be shelling out Rs. 57.96 lakh only in interest if it is taken at 9%. However, with the new system, even taking into account a higher rate of interest of 9.20%, borrowers will be paying Rs. 46.19 lakh on the same loan amount. Under this scheme, Axis Bank will be offering home loans between Rs. 3 lakh and Rs. 5 crore.