HDFC Wednesday said it has partnered with India Mortgage Guarantee Corporation (IMGC) for a mortgage guarantee-backed home loan.
Mortgage guarantee is a financial product which compensates lending institutions for losses that may arise if a home owner defaults on a mortgage loan.
The risk of the home loan gets transferred from the bank/FIs to the mortgage guarantee company.
With this partnership, HDFC will be able to further penetrate home loan market and access an enlarged customer base, it said in a release.
It will help the company offer more loan to a home loan customer on an enhanced eligibility as also it helps customers to avail loans beyond their retirement period.
HDFC said the finer details of the product are being worked out and will be known to market soon.
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"Mortgage-guarantee is already a popular product in international market and this partnership will help diversify our offerings to a wider segment of customers.
"This will also help us to support the government's mission under Prime Minister Awas Yojana Scheme to provide Housing for all by 2022," HDFC Managing Director Renu Sud Karnad said.
The partnership aims to address middle age-salaried customers, self employed customers and young salaried customers as also a wide segment of unserviced customers.
"We are witnessing great acceptance of our product in the Indian housing finance sector. We see stepped-up interest in using mortgage guarantee as an effective risk mitigant across lending categories," said Mahesh Misra, CEO, IMGC.
Mortgage guarantee or mortgage insurance as it is known in some markets, is well-established in the US, Australia, and Canada with market penetration of 15 per cent in the US and 22 per cent in Canada.
In India, mortgage guarantee is on the rise with market penetration between 5-20 per cent across lenders who are leveraging the product to grow their books, HDFC said.