Home loans have been one of the significant commercial obligations that any earning individual makes in his/her life. Having an own house is a vision of almost everyone, and this is one of the biggest reasons home loans are so widespread in the banking or lending sectors. With innumerable numbers of home loan vendors in the market, the debtor has the utmost flexibility to choose from numerous options.
Nowadays, most of the home loan vendors offer different types of customized payment resolutions to provide to the requirement of the borrowers. While some companies offer flexibility in reimbursing the amount, some offer solutions associated with different phases of home construction.
Home loans are easy to take, but when it comes to repayment, at times, it seems to be a burden. This post focus on a wide range of options that you can consider for repayment options for the home loan.
- Step-Up Plan
This is one such plan or way to repay the home loan aimed at young borrowers. This is very effective for all those who have started their careers. Through this plan, borrowers get higher loan amounts and lower payments in the initial years, which is quite satisfactory.
The best thing is that the step-up plan is directly linked with the financial growth of the borrower. Eventually, EMI increases with an increase in income. It is not special for the borrower because there is no moratorium period in the loan, and the date of actual EMI starts from the first day.
- Lump-Sum Repayment
Lump-sum recompense empowers a borrower to reimburse the entire loan amount as per their convenience before the tenure of the loan expires. Home loans, be it for HDFC or ICICI home loan, that is availed for under-construction are not consumed altogether and are paid on monthly instalments. The instalments are ruled out based on the process of construction.
In such a scenario, the lender can repay interest on the amount gathered until the final instalment is paid out. After the final dispensing the loan amount, the lender can start making EMI payments. In case the lender wants to refund the primary amount if there are adequate funds, the lender can start paying the EMI for the loan amount. The lump-sum you pay will be adjusted for the interest, and the remaining balance will be managed counter to the principal amount.
- EMI Holiday
There are only limited loan vendors that offer EMI holidays at the commencement of the home loan repayment. EMI holiday is a criterion of delaying or postponing an EMI deduction from the borrower’s bank account. The delay usually happens for some months after the disbursal of the home loan. It is mainly done to allow the borrowers to start making the repayments after three months of starting with the home loan.
- Balloon Payment
Under balloon payment mode, the borrower of the home loan has the ability to repay one-third of the loan amount in the last instalments. Balloon payment usually involves lump-sum payment towards a loan that too in the predetermined span of time, like 5 years or in the last stage of the long-term loan.
Although it is an option, this option for repayment is most suited for those having high financial needs. One must not consider this option as the borrower might need to pay a higher interest rate as compared to the other loan schemes or plans.
If you plan to opt for a home loan, you may consider these options to reimburse the loan amount. Make sure to decide on any of the options given here or outside this only after enough consideration.