Citibank Home Loans Review

Corporate Profile

Citibank is one of the largest banks in the U.S., and is a part of the financial services company Citigroup. Citibank had been founded in the year 1812. Initially its name was City Bank of New York, which was later changed to First National City Bank of New York.

In over 100 countries worldwide, Citibank has been carrying out its operations, which comprise of regular banking services along with credit card, insurance and investment services. The bank claims to have a customer base of 15 million users catered by its online services division alone.

As Citibank was badly affected by the financial crisis of 2008, the U.S. government provided the bank with an aid of US$ 50 billion in two installments of US$ 25 billion each.

In India, Citibank is present at 28 locations as of April 13, 2009. The bank offers a variety of services and products under the Personal Banking, NRI Banking and Corporate Banking categories. Citibank home loans can be availed for purchase of under construction properties or purchase of ready property or self construction or purchase of plot and self construction thereon.

Analysis

Loan to Value Ratio – Citibank Home Loans can be applied for a maximum of 85% of the property value subject to credit discretion and are accompanied by a specially-designed insurance cover. This feature is very much comparable to other products in the market; other banks like GE Money, IDBI, UCO, Axis, Kotak Mahindra, ING Vysya, BHW Birla and HDFC too offer loans up to 85% of the property value. Few banks are more lenient when it comes to loan to value ratio.

Tenure – Citibank offers a flexible repayment tenure upto 25 years. Banks like UCO, HSBC, Axis, Canara and Central Bank of India also offer loans upto the same tenure.

Interest Rates –

• Floating Interest Rate on all loans booked upto and including June 30, 2010 are linked to the Citibank Mortgage Prime Rate. The Citibank Mortgage Prime Rate (CMPR) is 13.50% effective from August 11, 2009. Interest on Floating Home Loans is linked to the CMPR and the existing loans are in the range of 550 bps below and 525 bps above the CMPR.

• Effective July 1, 2010, the Interest Rate on new loans is benchmarked to the Reference Rate.
  1. Home Loans are referenced to the Home Loan Reference Rate (HLRR)
  2. Property Power, Home Loan Top-up, Home Loan Takeover Enhancements are referenced to the Property Power Reference Rate (PPRR)

The Reference Rate is calculated, inter alia, on the basis of the Base Rate of Citibank as applicable from time to time.

The current Reference Rates (effective July 1, 2010) are:

- Home Loan Reference Rate (HLRR) – 9.50%, i.e., Base Rate + 2.25%;

- Property Power Reference Rate (PPRR) – 11.50%, i.e., Base Rate + 4.25%.

Base rate effective as of July 1, 2010, is 7.25% per annum.

Prepayment Charges – No interest is charged on partial prepayment(s). A nominal fee of 2% is payable in case, it is transferred to another bank or housing finance company. This feature is comparable to banks like IDBI, PNB, SBI and UCO. Axis Bank does not levy any charges for prepayment.

Processing Fees – Citibank levies 1% of the loan amount (applied for) as processing charges. As against this, IDBI Bank’s processing fee is one of the lowest in the market at 11,000/- or 0.5%, whichever is lower.