Everybody has a dream of buying a home in their lifetime but this process of achieving a dream might get you through different tedious processes of researching and running around. Firstly starting from selecting the house of your dreams to generating the finance for the house, for which you will probably borrow a portion of the total amount of the house from a lender like a bank or any home finance company.
But while searching for the best home loan and getting convinced with the profits of the home loan, you always consider the home loan interest, the processing fee, and the requirements of the different documents which give you ease and minimum efforts while financing. So for easing your work these days the lenders are offering many different ways of customizing repayment options so that you can opt for the most feasible option as per your loan requirements.
Following is the list of repayment options that provide you with flexibility in repaying the loan and among which also have options considered only with different stages of construction. Some of these options can also provide you with an increase in repayment capacity with some tax benefits.
Home Loans with Delayed EMI payments
It is a type of home loan in which you do not have to pay the EMIs at the starting of the loan tenure considering you cant pay at the initial stages after applying. This gives you the freedom of starting the repayment of your home loan later. Such a scheme is being provided by different banks like SBI in which they have the option of Flexi-pay in which you are not bound to make any payment anywhere between the tenure of 36 months to 60 months. This period of not paying your repayments is called as Moratorium period and in which you have the right to not pay EMIs but only the pre-agreed rate.
Step-down Repayment Plan
Step-down payment is also called the flexible installment plan. This plan is structured in such a way that the payable EMI amount paid by you for the home loan will gradually decrease as the loan progresses. This plan uses the concept of reducing the payable balance to determine EMI amounts in different stages of the repayment.
This s considered one of the best ways of repayment if you are near to getting a retirement. This is because of such kind of repayment option you can pay high EMI amounts initially when you are employed or when they have adequate financial condition initially and in the later years, the EMI will reduce when you will be retired or have less income. In such a repayment option you have repayment amount proportionality with a decrease in their income. In such types of plans, you can opt for a joint repayment option with your spouse. Hence when you are close to retirement and your spouse might have just started earning. So the income of both the parent and children combined to avail a long-term loan.
Step-up Repayment Plan or Home Loan with Increasing EMI
In this type of repayment option, the structure is in such a way that the home loan EMIs keeps on increasing after the initial few years. This is like you have fewer EMIs amounts initially and will keep on increasing after some tenure. This type of repayment option is offered by different banks like HDFC-SURF (Housing Development Finance Corporation’s), ICICI Bank’s Step Up Home Loans, etc. It gives you the privilege of opting for a higher loan amount. However, the repayment is accelerated with the increasing tenure. This repayment plan is good when you have to guarantee higher income in the upcoming years or near future.
Home Loan with Lump-sum Payment
When you invest in an under-construction property, you are generally entitled to payments of the interest on the loan amount drawn till the final disbursement. EMIs are payable after the full construction. In case if you wish to start the principal repayment immediately, you do have the option to start paying EMIs on the cumulative amount sanctioned. The amount paid will be adjusted with the interest amount. The balance amount will further tend towards principal repayment. There is only one thing that you have to take into consideration that there is no tax benefit on principal paid during the construction period. But the interest paid gets the tax benefits of post-occupancy of the home.
Under this type of repayment, you have to pay them one-third of the loan amount in the last installments. Ballon payment involves a lump sum payment towards a loan is some predetermined intervals of 5 years or at the last stages of a long-term loan. This repayment option is best suited for those of you who have very high financial needs. But it is always suggested to avoid this type of repayment because this option has more interest rates when compared to any other loan scheme or plan.
Fixed and Flexible Installment Plan
As we know that under a fixed repayment plan for a home loan, the amount for EMI is fixed for certain tenure or the whole tenure. If it is fixed for a particular period, EMI is adjusted with that period as per the ongoing market rates. During the fixed tenure, EMI is not affected by market conditions and it always remains constant. A fixed-rate installment plan is the best option for you when interest rates are expected to rise in upcoming years. However, it is suggested to you to be aware while signing the loan agreement whether it has the provision of increasing the fixed amount in fixed time.
But in the case of flexible loan repayment options, the EMIs are not fixed and do vary with ongoing fluctuations in the market. EMIs cant is the same for a long period as it is flexible repayment. The EMIs may increase or may decrease depending on whether the market is fluctuating positively or negatively.