Every housing finance companies or banks
have customized repayment options to suit every individual's
requirement and also repaying capacity with some tax
benefits. They have thereby come up with more flexible
and Multiple Repayment Option.
A few among them are:
Step-up Repayment Facility
The objective of step-up repayment is to provide the borrower
with a repayment schedule, which is linked to expected growth
in income. It not only helps a customer get a larger amount
of loan as compared to the loan under the normal housing loan;
but the customer can avail of a higher amount of loan and
pay lower EMIs in the initial years, which is subsequently
accelerated proportionately with the assumed increase in his
Flexible Loan installments Plan
This repayment option offers a customized solution to suit
the needs of customers whose repayment capacity is likely
to alter during the term of the loan. In cases when a borrower
is nearing retirement, the loan is structured in such a way
that the EMI is higher during the initial years and subsequently
decreases in the latter part proportionate to the reduced
income of the customer. This option helps such customers combine
the incomes and take a long term home loan where in the installment
reduces upon retirement of the borrower.
Tranche Based EMI
Customers purchasing an under construction property, need
to pay interest (on the loan amount drawn based on level of
construction) till the property is ready. Tranche Based EMI
is a special facility offered by some banks to help customer
save this interest. Customers can fix the installments they
wish to pay till the property is ready. The minimum amount
payable is the interest on the loan amount drawn. Anything
over and above the interest paid by the customer goes towards
principal repayment. The customer benefits by starting EMI
and hence repays the loan faster.
Accelerated Repayment Scheme
Accelerated Repayment Scheme offers you a great opportunity
to repay the loan faster by increasing the EMI. Whenever you
get an increment, increase in your disposable income or have
lump sum funds for loan prepayment, you can benefit by
- Increase in EMI means faster loan repayment
- Saving of interest because of faster loan repayment
- Or invest lump sum funds rather than use it for loan prepayment.
The return from the investments also gives you the comfort
of paying the increased EMI.
Balloon Payment is an augmentation tool offered by the financial
institutions, which helps in increasing the loan eligibility
of the customer without increasing the EMI by assigning securities
like National Savings Certificate (NSC), LIC policies etc.
The present value of the maturity amount of assigned securities
is combined with the loan amount to arrive at the enhanced
loan eligibility. Under this facility, the EMI is calculated
on the net loan amount (i.e. total loan less the present value
of the maturity value of the securities).