Home Loans are one of the most sought-after loans as having a roof over the head is one of the utmost important things in life. In sync with ‘Housing for all by 2022,’ the banks and financial institutions in India are also promoting Home Loans. It has not only become very easy to apply and get approval for the Housing Loan today, but you can also avail of a lot of flexible terms on Home Loan repayment.
When we talk about repayment options for Home Loan, there are a lot of personalized offers that are being provided by various banks and financial institutions. These offers are so designed and tailor-made that they tend to suit both the lender and borrower and most of the times, they provide full flexibility as far as the repayment is considered. Besides, the borrower can also enjoy tax benefits on the repayment amount.
Each bank has something different to offer you, so you must carefully research the available deals. For example: On Deutsche Bank Home Loan, loan interest is calculated on a daily reducing balance, and thus your monthly instalments reduce every time you pay off your EMI or make a pre-payment of the loan. Likewise, on RBL Bank Home Loan product “Easy Home Loan” you can considerably save interest amount and pay your loan faster.
To further understand the repayment flexibility offered by the leading banks and financial institutions in India, let’s explore five ways to repay your Home Loan.
In a traditional loan structure, the EMI for the Loan starts from the second Month onwards, after the disbursal of the Home Loan. However today, you can avail of delayed EMI payment plan on your Home Loan. For example, SBI FlexiPay Home Loan allows you to pay out your EMIs after 3 to 5 years of initiating the loan.
In this case, once the Home Loan has been availed, the borrower is not bound to make any EMI payment for the Home Loan for the period up to 60 months from the beginning of the loan. This period is known as the moratorium period.
During this period, the Home Loan borrower is not expected to pay anything to the lender or the bank, except for the pre-agreed rate. This is a good Home Loan repayment option, especially for those who are unable to pay the Home Loan during the initial period.
Many banks including ICICI, IDBI, and SBI provide an option where a current account is opened with your Home Loan Account. Herein, the interest on the Home Loan is linked to the surplus funds that are currently parked in the linked Current Account. This doesn’t affect the balance in your current account, and you can deposit and withdraw funds from the account as and when required.
The interest on the Home Loan is calculated based on the remaining balance of the Home Loan (after subtracted the linked current account balance). It does reduce the amount you pay for loan interest considerably; however, the bank may charge you a higher rate of interest on such a Home Loan. So, it is recommended to do the mathematics carefully before availing of this facility.
Step-up Home Loan Repayment is also known as Home Loan with increasing EMIs. Herein, the EMI on Home Loan is lesser during the initial years, for a fixed duration; post that, the EMI amount increases for the rest of the tenure.
This Type of Home Loans repayment has multiple benefits. People who have a lesser income right now and are sure to have positive growth in the later years can avail of Step-Up Home Loan. Besides, as the instalment amount of the loan is stretched out, it speeds up the overall repayment of the loan.
In complete contrast to Step-Up Home Loan, you can opt for a Step-Down Home Loan repayment option. Herein, the Home Loan EMIs are higher during the initial years and then as the plan progresses, EMIs decrease.
This Home Loan repayment plan is ideal for people close to retirement. As during the initial years, the individual is still earning and hence able to pay the higher EMIs. However, during the later years, the income reduces and at the same time the EMIs decrease, making the Home Loan affordable.
Likewise, in cases where the parents and children avail the Home Loan together can avail of Step-Down Home Loan. In the initial years, both the children and the parents are earning and can afford to have higher EMIs. However, in the later years when the parents retire, they can comfortably transfer the load of the Home Loan on the children with lower EMIs.
There are various benefits that a bank can offer you when you avail a long term loan with them. One such benefit that you can avail of is the waiver of certain EMIs on achieving a milestone on your Home Loan.
For instance, by opting for Axis Bank’s Fast Forward Home Loan or Shubh Aarambh Home Loan, you can enjoy a complete waiver of 6 to 12 months of EMIs as you complete 4 to 15 years of the Home loan.
In all, it would be fair to say that you get thorough flexibility in choosing the Home Loan Repayment and instalment structures from banks these days. However, it is paramount to do your research before availing any scheme from any particular bank.
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