Mumbai, Aug. 26: ICICI Bank today launched the country's first mortgage guarantee-backed loans for retail customers who plan to buy their first home in the affordable housing segment.

Mortgage guarantee is a financial surety in which a guarantor company assumes a portion of the lender's risk in a mortgage loan.

ICICI Bank has launched this initiative with India Mortgage Guarantee Corporation, a joint venture between National Housing Bank, NYSE-listed Genworth Financial Inc, the International Finance Corporation and the Asian Development Bank.

According to the bank, its new product will help a borrower increase his loan amount by up to 20 per cent. It also extends the repayment period by seven years. At present, the repayment tenure for most housing loans is capped at 60 years of age. However, this product - ICICI Bank Extraa Home Loans - extends the repayment period up to 67 years of age.

"We foresee an emergence of enormous demand for affordable housing in Tier II and Tier III cities. This initiative will catalyse the growth of the Indian mortgage market by giving consumers improved affordability without any incremental risks for lenders," ICICI Bank CEO Chanda Kochhar said.

Both salaried and self-employed individuals seeking home loans of up to Rs 75 lakh are eligible for this loan on payment of a one-time mortgage guarantee fee, which will be up to 2 per cent of the loan.

ICICI Bank executive director Rajiv Sabharwal said the fee would depend on the age of the borrower, extension in tenure, the nature of income - whether salaried or self-employed - and the loan-to-value ratio.

Sources said the product would only be available for those who are purchasing their first home.

The scheme will be initially offered at the bank's branches in Mumbai, NCR, Bangalore and Surat.

-OVERMATTER-