Top Home Loan Repayment Options
Buying a home is not an easy process, especially when it involves lots of things to look at. Any buying of a home involves taking a deep research for the property, its legality and various factors related to the property. You must look towards the location of the property, along with the convenience which comes with the property, need to check the environment of the property and have to go through a tedious process of the home inspection to make sure that you are buying a good property, which deserves every single penny, you will be spending on. Thus, making sure that the home you are aiming at buying is worthy to be bought is just one of the few steps, which you need to take during your home buying process.
What comes next is the same tedious task just like the choice of the property, the task of choice of the home loan lender. Scouting a good home loan lender is equally important as the choice of the property. The home loan is a long-term responsibility and thus making a choice of the best home loan provider for your home loan is a must and which needs to be done properly. Any wrong choice may get you into the trouble at least for some time, after which can, of course, opt for the home loan balance transfer process.
There are several important aspects, which a person needs to look while making a choice of the home loan lender. In most of the cases, it has been that the loan borrowers are just focused on the interest rate, while ignoring several other important aspects. Among those important aspects, the repayment option is one of them, which the home loan borrower must also take a note of if the borrower is seriously looking for the best experience in a home loan.
Home loan repayment options
Home Loan repayment options are an important factor that a person should consider while taking a home loan and that is the type of loan. There are different options that come with various repayment options, which are listed below:
Home Loan with increasing EMIs
Home Loan with increasing EMIs is just a way to the Home loan repayment that allows the loan borrowers to pay the EMI of their existing loans in terms of increasing EMIs. If someone is looking for the home loan, which involves payment of EMIs that keeps on increasing, the Home Loan with increasing EMIs can come to the use. In such a type of home loan, the loan borrowers are facilitated with the higher loan amount and lower payment of EMIs in the initial years. Later on, as the time progresses, the repayment mode is accelerated and the loan borrower needs to pay with the increased EMI.
How does this play a useful hand in the Home Loan?
Consider a scenario when presently you have the lower income, but subsequently, as the time progresses, your income will progress. Thus, this process of repayment option allows you to pay low in the near future, and later on, you can pay higher EMIs, as your income will keep on improving with the time. Thus, paying increasing EMI can help you in getting rid of a heavy burden in the initial years, and later on quickly close the loan with the accelerated payment of EMIs. However, you must acknowledge this fact, that in case your income fails to meet the accelerated growth, you may feel a difficulty towards the repayment of increasing EMIs later on.
Home Loan with decreasing EMIs
Home Loan with decreasing EMIs, just like HDFC’s Flexible Loan Installments Plan, is a loan plan where you are entitled to pay higher EMI in the initial loan years and subsequently, the lower EMIs in the latter stages of the loan. This is made to ensure that you clear your entire interest quotient in the early stages of the home loan, by paying higher EMIs in the initial stages of the home loan.
This technique comes to the good use when you are planning to prepay the entire Loan much before the actual home loan tenure is. Thus, you must be ready with the prepayment plan, as soon as the EMI starts decreasing and close your loan as quickly as possible. This is a very helpful repayment plan, especially in case you are looking for the foreclosure of the home loan and have made up your mind, even before taking a home loan.
Home Loan by linking idle savings in the bank account
Another repayment option of your home loan, the Home Loan by linking idle savings in the bank account is a way to link your home loan account with your current account that is opened along with. The beneficial aspect is that the interest liability of your home loan decreases to the extent of the surplus funds available in your bank account, associated with the home loan. Another salient feature of such facility is that you have the complete liberty deposit funds or withdraw funds as and when required. However, the interest rate is calculated on the basis of the outstanding balance of the loan negated by the balance available in the current account.
However one must remember a fact that even if the overall burden of the interest gets reduced from the shoulders of the loan borrowers, the banks may charge you an additional interest rate for availing such a kind of repayment of Home Loan option.
Home Loan with the delayed start of EMI Payments
There are some banks that offer such a facility of the delayed start of EMI Payment on home loans. Under such a repayment option, the loan borrower is offered a facility where the borrower needs to pay any repayment of home loan ranging from a period of 3 years to 5 years, this period of time is called as the moratorium period. The only catch is that the borrower needs to pay Pre EMI interest on home loan.
As soon as the moratorium period ends, the borrowers will be required to start paying the EMIs which keeps on increasing as the time progresses, with a certain pre-agreed rate. Under this loan repayment option, a person can be offered a higher loan amount. The loan facility of this nature is available to salaried professionals who are aged from 21 years to 45 years. One such example of the home loan is the SBI Flexipay home loan, which offers the customers with the Home Loan with the delayed start of EMI Payments. These kinds of loans are highly beneficial in several aspects, like unavailability of the income source to carry out the burden of EMIs etc. But in addition to this, it also brings a burden of the increasing EMI in the later years, and thus a person needs to have a secure job and a decent earning to be able to fund the increasing EMI. Also, remember that the initial payments of the EMI in the initial years of the loan repayment go completely towards paying the interest.
Home Loan with longer repayment tenure
The home loan repayment option “Home Loan with longer repayment tenure”, allows borrowers to increase the loan eligibility amount up to 20%. Along with this, the home loan borrowers are provided with the facility to extend the repayment period up to 67 years of age
There are some banks, which offer such kind of home loan repayment option, as one ICICI Bank’s home loan ‘Extraa Home Loans’ is one such.
There are some restrictions and downsides of such a home loan repayment scheme under which the borrower has to shell out extra fee of 1% to 2% of the total loan amount as the guarantee of such a home loan repayment is ensured by the India Mortgage Guarantee Corporation. Thus the risk involved in the increase in the loan amount and the loan tenure is covered by the IMGC.
Home Loan with a waiver of EMI
Such a home loan repayment option allows a loan borrower to get waived off with 12 EMIs, in case he/she pays all other installments regularly and on time. There are banks, which offer such a home loan facility of “Home Loan with a waiver of EMI”, and Axis Bank’s ‘Fast Forward Home Loans’ is one of them. The home loan borrower is exempted of 6 EMIs upon the completion of 10 years, and another 6 EMIs upon the completion of 15 years; the home loan tenure must be 20 years to avail such a home loan repayment scheme and also that the minimum loan amount must be 30 lacs and not less than that. There are many such home loan repayment options as offered by different banks and the home loan borrowers must check all the terms and conditions very properly and must always aim towards the foreclosure of the home loan.
Home Loan with lump sum payment in under-construction property
This home loan repayment option is one of the others repayment schemes as offered to the home loan borrowers who are looking to buy the under construction property. This home loan repayment scheme allows the borrowers to service only the interest on the loan amount withdrawn until the final disbursement and pay the EMIs thereafter. Also offered is the option to start the principal repayment immediately, where the loan borrowers can opt to the repayment of EMIs on the disbursed accumulative amount. This kind of home loan repayment ensures that whatever the amount is being paid by the loan borrower, it is being covered first of all towards the interest payment and the left over towards the principal repayment. However, there is a downside of home loan repayment with lump sum payment in under-construction property, as there is no tax benefit attached with the principal paid during the construction period of the house. However, once the occupancy of the home, the interest whatever is paid gets the tax exemption benefits. One such example of the loan with lump sum payment in under-construction property is HDFC’s Tranche Based EMI plan.
Whatever the choice of the home loan repayment you opt for, always make sure that the home loan is a long-term liability, which you must fulfill with no failure at all. Since it’s the secured loan type; a lot is at stake for you. Failure to repay your home loan can get you in trouble over the loss of the property which you put collateral as. Also make sure that you keep on prepaying towards your home loan, as the more you keep on prepaying, the faster you will get rid of the home loan liability and more you can save on your total amount to be paid on a home loan. Check out various prepayment terms and conditions, get acknowledged with the ways to save you the money towards your home loan, and ensure that you cut total expenses on your home loan repayment. Ensuring that you utilize the additional bonus and other such towards the prepayment of a home loan ensures you are on a correct path towards the repayment of a home loan.
Also considering various home loan repayment options, as stated above can help you in planning better for your home loan repayment and can help you in varieties of ways towards better home loan experience. While selecting the home loan lender for your home loan, make sure that you are selecting the right lender, that have varieties of home loan repayment options and that can guide better towards your preference. Ask them lots of queries and get the most satisfactory resolution for your home loan. Make sure that you are selecting the correct home loan repayment option for your home loan needs.
Make sure that you are selecting the right home loan repayment option which suits your needs and demands in order to experience a more convenient and hassle-free home loan and with the one, which satisfies you to the core of your heart!
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