When there is too much liquidity in the market, some of it has to be taken off. Teaser Home loans do just that. A Teaser Home Loan is a kind of business finance that is given by the lending market to the borrowing market, when there is an excessive liquidity situation. To minimize the inactivity of the lending market, business finance is doled out as Teaser Home Loans. Economies use this as an accelerator to gain enough activity.
Attractive interest rates and easy payment options characterize Teaser Home Loans. Teaser Home Loans will even have waivers of interest rates. Interest rates might get back to original rates after the-honeymoon’ period. One might tend to think if this business finance model is inspired by the clothing retail market.
Teaser Home Loans will have interest rates a couple of notches below standard rates. Fixed rates might be for a specific period of time, post-which the borrower will have the option to switch to floating rates. In India, affordable housing is the next wave of real estate. Teaser Home Loans provide the perfect business finance option for banks to tap into the customer base of this market. Buyers of economical homes will always flock to the teaser loan avenue.
Banks will not always keep Teaser Home Loan schemes. From a business finance perspective, the viability of long-term Teaser Home Loans is not convincing. So banks usually offer Teaser Home Loans for a finite period of time. For example, the State Bank of India brought out a home loan scheme. 8 percent interest was charged in the first year, and 9 percent from then onwards. From the 4th year, loans lesser than or equal to fifty lakh rupees, was charged at 9.25 percent interest. This is an example of a teaser home loan. Existing customers felt that the Teaser Home Loan was only to attract new customers. Expressing their concerns to the Banking Codes and Standards Board of India (BCSBI), customers felt that the business finance model of teaser loan providers was not inclusive.