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Home Loan repayment options are as follows
I. Home loan with increasing EMIs
In such loans, you can avail a higher loan amount and pay lower EMIs in the initial years. Subsequently, the repayment is accelerated proportionately with the assumed increase in your income. There is no moratorium period in this loan and the actual EMI begins from the first day. Paying increasing EMI helps in reducing the interest burden as the loan gets closed earlier.
II. Home loan by linking idle savings in bank account
The interest liability of your home loan comes down to the extent of surplus funds parked in the current account. You will be allowed to withdraw or deposit funds from the current account as and when required. The interest rate on the home loan will be calculated on the outstanding balance of loan minus balance in the current account.
III. Home loan with delayed start of EMI payments
Home loan comes with an option to go for a moratorium period of anywhere between 36 months and 60 months during which the borrower need not pay any EMI but only the pre-EMI interest is to be paid. Once the moratorium period ends, the EMI begins and will be increased during the subsequent years at a pre- agreed rate.
Compared to a normal home loan, in this loan one can also get a higher loan amount of up to 20%. This kind of loan is available only to salaried and working professionals aged between 21 years and 45 years.
IV. Home loan with decreasing EMIs
This loan is structured in a way that the EMI is higher during the initial years and subsequently decreases in the later years.
V. Home loan with lump sum payment in under-construction property
If you purchase an under construction property, you are generally required to service only the interest on the loan amount drawn till the final disbursement and pay the EMIs thereafter. In case you wish to start principal repayment immediately, you can opt to start paying EMIs on the cumulative amounts disbursed. The amount paid will be first adjusted for interest and the balance will go towards principal repayment.
VI. Home loan with longer repayment tenure
‘Extra Home Loans’ allows borrowers to enhance their loan eligibility amount up to 20 per cent and also provide an option to extend the repayment period up to 67 years of age and are for loans up to Rs 75 lakh.
These are the three variants of ‘Extra’.
a) For middle aged, salaried customers: This variant is suitable for salaried borrowers up to 48 years of age. While in a regular home loan, the borrowers will get a repayment schedule till their age of retirement, with this facility they can extend their loan tenure till 65 years of age.
b) For young, salaried customers: The salaried borrowers up to 37 years of age are eligible to avail a 30 year home loan with repayment tenure till 67 years of age.
c) Self-employed or freelancers: There are many self-employed customers who earn higher income in some months of the year, given the seasonality of the business they are in. This variant will take the borrower’s higher seasonal income into account while sanctioning those loans.
Types of repayment options:
1. Step-Up Repayment Loan: In this plan the repayment is directly linked to the borrower’s monetary growth. This helps the borrower to avail higher loan compared to a normal housing loan.
“This scheme is beneficial for those who buy a house at a younger age. That is because one’s income increases as one move ahead in career. Since people pay lower EMIs in initial years, they can adjust the loan as per their need and also enjoy the same tax benefit even if the EMI increases.
2. Accelerated Repayment Plan: In this plan borrowers can increase the EMI amount when they have surplus money or when the disposable income increases. Another option which is highly opted is paying a lump sum amount towards the loan. This helps in faster loan repayment and saves tax also.
3. Fixed and Flexible Instalment Plan: In a fixed repayment plan, the EMI will be fixed for a certain period after which it gets adjusted as per the market rate. During this fixed tenure, the EMI is not affected by market conditions. It is beneficial for borrowers when interest rates are expected to rise. However, one needs to be aware as many lenders in their agreement do have provision of increasing the fixed amount.
4. Balloon Repayment Plan: This plan is similar to the step up option, but in this option you could pay a very small amount of instalments in the beginning of the loan term. As the name suggests, in the later years of the loan term, the instalment amount also starts ballooning to a higher amount than the normal step up option.
5. Step-Down Repayment Plan: This is exactly opposite to the above option. Here, EMIs are higher in the initial years and decrease later. This plan is most suitable for people who borrow loan at an older age, i.e. mostly senior citizens or those nearing retirement. Since the income capacity alters at later stage, the lower repayment helps in keeping your finances within manageable limits.