AHFL offers home loans for three purposes: purchase of a house or apartment
for residential use, purchase of a plot of land and construction of
a home on it, and improvement or expansion of an existing home. As a
benefit, AHFL offers borrowers free insurance to cover property, risk of accidental
death, permanent injury that impairs earning capacity, or job loss
for a limited period. Loans are between Rs.0.1 to 0.6 million ($2,000 to
$12,000), but may not exceed 80% of the property cost or 75% of the land
cost. The average home loan size is Rs.0.49 million ($9,800). Approximately
55% of AHFL’s customers seek loans to purchase ready-made homes, while
25% seek loans for self-construction. Loan amounts are based on applicants’
repayment capacity, age, educational qualifications, stability and continuity
of income, number of dependents, co-applicant’s income, assets, liabilities,
and saving habits among other factors. The maximum loan tenure is
20 years; however, it is limited to the retirement age of 60 years for salaried
borrowers and 65 years for self-employed borrowers who do not have a retirement
age limit. Interest rates range from 11% to 14.5%. AHFL charges
1.5% of the loan amount as a processing fee