Caution for potential borrowers of LICHFL. Review on LIC Housing Finance Ltd

The whole purpose of this posting is to open up reality about LIC HFL offerings and see if this acts as an eye opener for LIC-HFL itself.

Here I'm listing some facts before anyone falls prey to attractive plans of LICHFL. Let me start with the(apparent) good points- Very easy, fast processing and money disbursal. Attractive for both home buyers and builders. The agents are also dealing well till the deal is signed.

Now coming to the reality- the ease of processing is nothing but a connivance with the builder, funds are disbursed without proper progress checks(I have seen SBI withholding funds clearly citing the lack of construction progress, but LICHFL gives money to builder) and most importantly property documents verification. I was surprised to see LICHFL financing projects even before sanction plan is obtained by builder and projects with clear deviation. The risk falls on  to the buyer and I advise anyone not to presume a construction project is good just by seeing'Approved by LIC Housing Finance'! Most often it's to be understood the builder has taken a shortcut unless you see other credible banks, say SBI, approving the project.

Next the key information about loan plans- LIC HFL lures buyers with a low interest plan which has fixed rate for first 2 or 3 years and then reset to floating market value. The initial fixed rate is always competitive and can lure customers. But the real problem starts once the fixed tenure is over. The floating rate to which they reset is a market high(est) rate and one faints to see the account statement. The EMI or the loan tenure is increased beyond your imagination and you realize that honeymoon is over:)

Pathetic part is that still you see them attracting new customers with low interest plans and when you request for a scheme conversion, they turn blind eyes to you. Even private lenders like HDFC and ICICI gives this facility to existing customers to migrate to their new/low interest plans with a nominal conversion fee. LIC HFL is nothing short of a cheater here. Their stand on this matter is in absolute contradiction to the'code of business ethics' shown in the website. My letters to regional and zonal heads on this matter has yielded no response.

Hence I advise all the prospective borrowers to consider other credible lenders than taking the easy route of LIC-HFL.

Regards

Premgy