Different Types of Repayment Options for Home Loan

Ideally, we should take loans when we’re confident enough to be able to repay it in the given time duration. When it comes to taking a home loan, you have more than just one way of repaying it.

We are all aware of the standard EMI method of home loan repayments. In the beginning, you pay the interest amount and after the final disbursement of the loan, your EMIs start. You can use the home loan EMI calculator to check the amount of EMI you need to pay every month in this situation.

Repayment options for home loan

Other repayment options are more flexible in nature. Let’s take a look at them:

●       Delay in EMI Payments

Considering that you incur the most expenses when you’re buying a new home, it’s a great benefit to start your repayments a little late. You can start your repayment after 3 months of disbursing the loan here. This gives you a little time in the beginning to make up for what you’ve spent additionally to make your new home.

●       Step-Up Flexi EMI Plan

If you are a full-time employee, you will expect your income to grow with time. Even if you have a growing business, you can expect greater income at your disposal after 5 years than in the short run. Considering these situations, this plan allows you to pay lesser EMI in the beginning and a higher amount in the later stage.

●       Step-Down Flexi EMI Plan

This is quite the opposite of the step-up EMI plan, meaning that you pay higher installments in the beginning and lower installments towards the end. If you currently have a high disposable income, you can opt for this plan, lowering your burden for the later stages in life. The home loan interest rate payments are reduced in this option.

●       Bullet Flexi EMI Plan

In this plan, you can pay an additional part principal amount along with your EMI. This additional amount can vary as per your convenience and doesn’t have to be increasing or decreasing. If you keep getting incentives at work or are self-employed getting higher profits from time to time, you can opt for this plan. This will also eventually reduce the amount of home loan interest rate you have to pay.

●       Lump Sum Payment

This is quite the opposite of delayed payment of EMIs, where you start your EMI payment right away. First, the EMI is adjusted with the interest amount and the balance starts getting deducted from the principal amount. Thus, you can repay your loan here before the tenure ends.

●       Balloon Payment Method

Here too, you start the repayment of your principal amount right away. The main difference here is that you pay one-third of the home loan amount in the last installment here. This lump sum payment is made in long intervals. However, this brings in a drawback of paying higher interest too.

●       Waiver of EMI

In this method, if you’ve been paying your instalments regularly, you can waive off 12 EMIs in the entire duration of payment. After 10 years of regular installment payment, you can waive off six months of EMI payment. The other six months can be waived off after completion of 15 years. You can go for this plan if your loan amount is above 30 lakhs and the tenure is at least 20 years.

For all these options, you can use the home loan EMI calculator to check the relevant EMI.

Which One To Choose?

Ideally, the home loan repayment method should be chosen based on your financial position, how much money you currently have at your disposal, home loan interest rates, and how much you will be able to pay in the long run. Check with your lender the home loan repayment options available and then pick the option that best suits your pocket.