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Sri Lankans aspiring to build or buy their first home with bank loans will receive a significant financial concession from the Commercial Bank of Ceylon with the introduction of a new Home Loans product that offers a free or discounted Decreasing Term Assurance Policy (DTAP) covering the loan.
Another first in Sri Lanka, Commercial Bank’s ‘First Time Home Buyers and Builders’ scheme is designed to eliminate or reduce the burden of the cost of the loan protection insurance at a time when construction costs as well as interest rates are rising, the Bank said.
While the Bank will contribute 100% of the premiums of the DTAP in respect of Home Loans granted to borrowers below the age of 40, borrowers above 40 and up to 50 will enjoy a concession of 50% on their DTAP premiums. The discount on DTAP premiums would be 25% for borrowers in the above 50 and below 60 category.
By providing the DTAP free or at concessionary rates, the Bank said it is also contributing to ensure that customers and their dependants are protected against the risk of the applicant’s untimely death or total and permanent disability. The significance of the availability of a DTAP is that in the event of such an occurrence during the term of the loan, the insurance company will settle the loan in full.
The consequences of not having insurance protection against a home loan could be serious and, in some instances, may also lead to the applicants and their families’ facing difficulties during unforeseen events, the Bank said.
Besides the newly-launched product with free or concessionary DTAP, Commercial Bank pioneered ‘’Flexible Home Loans’’ options, which include Residual Home Loans and Step-up Home Loans. These options have been designed for applicants whose repayment capacity is inadequate or exceed 60% of the total remuneration, when the monthly instalment is calculated under traditional methods, such as EMI (Equated Method Instalment) and Reducing Balance Methods.
Under Residual Home Loans, customers can repay part of the capital of the loan and postpone the repayment of the balance. As in the case of Step-up Loans, tailor-made, graduated repayment plans are offered, after evaluating the applicant’s present and projected income.
Additionally, the Bank said it also offers a five-year grace period for professionals and high net worth individuals, where they can pay only the interest during the grace period and thereafter commence the repayment of capital together with interest, under any available method of repayment such as Equated Monthly Instalment, Reducing Balance Method, Residual or Step-up Home Loans, whichever best suits each borrower.
