Banks and NBFCs offer many customized repayment options to suit the borrower’s loan requirements. Some provide flexibility in repaying the loan, others are linked to the stages of the house construction. If carefully planned, these can increase the repayment capacity of the borrower along with tax benefits. Check Loans online before you take any decision.
A home loan where there is an option for delayed EMI is very helpful for such borrowers who are not able to pay the EMIs at onset of the loan tenure. This period is called the moratorium period, where the borrower need not pay any EMI but only the pre-agreed rate.
The Step-down repayment plan is also known as the flexible installment plan and it is structured in such a way that the EMI amount payable for the home loan will keep on decreasing as the loan period progresses. So in the initial years the repayment installments or the EMIs will be high and will gradually reduce for subsequent years.
Step up repayment plan is shaped up in such a way that the EMIs will keep increasing after the first few years. Here in the initial years the EMI will be less and will increase after some period. With this plan, one can avail a higher loan amount and pay lower EMIs in the initial years and this repayment plan is good for those you have to guaranteed higher income in later years or near future.
When an under construction property is purchased, a borrower is usually required to serve only the interest on the loan amount drawn till the final payment, the EMIs are payable afterwards. If one desires, they can start paying for the principal amount immediately as well, so they have the option for cumulative repayment. The amount paid will be first adjusted for the interest. The balance amount will go towards principal repayment.
In this scheme a lump sum payment, usually one third of the amount is done in a predetermined interval, say 5 yearly or at the last stages of a long-term loan. This repayment option is recommended only for those who have very high financial needs and should be generally avoided as you will have to pay more interest as compared to any other loan schemes.
Under a fixed repayment plan, the EMI is fixed for a certain period or for the whole tenure. For the fixed tenure, the EMI is not affected by market conditions and it remains constant. This plan is beneficial when interest rates are expected to rise in near future. The borrower has to be aware while signing the loan agreement as some lenders in their agreement have the provision of increasing the fixed amount in fixed time.
Whereas in a flexible loan repayment option, the EMIs are not fixed and varies with the market rates so here the EMI will increase or decrease depending on the market value.
A unique scheme where some of the loan EMI is waived off after completion of a certain period without any defaulting. This repayment scheme is available with Axis Bank known as ‘Fast Forward Home Loans’. Under this scheme, 12 EMIs can be waived off if there has been no default in EMI payments, but Under this scheme, the loan tenure has to be for 20 years with the minimum loan amount of INR 30 lakh.