SBI tailors home loans to suit 7th Pay Commission beneficiaries

State Bank of India (SBI) has come out with cheaper home loan schemes for defence and other government employees with tenures extending up to 75 years of age as most state-run banks look to cash in on the Pay Commission bonanza for about 10 million government staff and pensioners.

The country's biggest lender has said it will offer two new home loan products 'SBI Privilege Home Loan' for government employees and 'SBI Shaurya Home Loan' for defence personnel without any processing fee.

''Under the new schemes, employees of central / state governments, defence forces, public sector banks, public sector enterprises of central government and other individuals with pensionable service will be offered home loans tailored to their specific needs,'' SBI said in a statement.

Other state-run banks like Punjab National Bank are also looking to cash in on the salary hikes that central government employees that will release over Rs60,000 crore into the market while adding Rs1,02,000 crore to the wages over 10 million employees and pensioners.

The new products offer extended repayment term till the borrower turns 75 years against the existing 70 years, and also a full waiver of processing fees, SBI said.

There will be a lower EMI burden post retirement and 0.05 per cent concession over the home loan interest. ''Benefit of lower interest rate as a concession of 5 bps (0.05 per cent) over the home loan card interest rate is available wherever check-off facility is extended by the government under tie-up arrangement with the bank,'' SBI said.

The bank said the tailor-made products will help customers purchase a spacious or luxurious home without stretching their post-retirement finances.

The bank is extending the option of switching to the new loan products to customers of other banks as well, allowing them an option to switch over their home loan outstanding balance to SBI.

''The launch of 'SBI Privilege Home Loan' and 'SBI Shaurya Home Loan' products is timed with the notification of 7th Pay Commission recommendations. Surplus income can thus be utilised by government employees and defence personnel towards purchase of new/better house,'' SBI said.