The Best Repayment Option For Home Loans In India

For most home loan borrowers, repayment option is just one minor section of the house loan packaging. Truth be told, it is far more important and complicated than just that. What it means is that the repayment option for home loans in India may seem like one of the many choices you make; however, it has a significant influence on your fiscal health.

For example: The housing finance companies in India allow several kinds of repayment options. But, if you choose the step up repayment plan, you will need a long term strategy to have more disposable income over the years as the home loan EMIs will continue to increase. That will not be the best repayment option for a housing loan borrower in his 40s as the other expenses will continue to expand too. Therefore, here is how you can go about choosing the best repayment option for your housing loan.

Step 1: Understand the repayment options and its implications

The number of repayment options available to the house loan borrower will vary with every housing finance company. However, the basic list of options tends to remain, more or less, the same. Here are your standard choices:

* Step up repayment: The home loan EMIs increase over a period of time

* Step down repayment: The EMIs lower down over the duration of the home loan tenure

* Balloon repayment option is similar to the step up option in terms of EMI structuring

* Tranche based repayment option is ideal for properties under construction

* Accelerated repayment plan is to make additional repayment as per the convenience of the home loan borrowers

Step 2: Consider your realistic options

The consideration of options will depend on the several dynamics as they operate in the real world. Here are the primary criteria that you should consider as a home loan borrower while selecting or changing the repayment option of your home loan:

* Age of the borrowers
* Property
* Home loan tenure
* Monthly cash flow
* Current assets and liabilities of the borrower

In most cases, the choices become very obvious at this stage thus simplifying the option for most home loan borrowers. However, some may need further deliberation.

Step 3: Select the best repayment option for your housing loan

If you have more than one suitable repayment option available for your home loan, then the selection of the best repayment plan will come down to the fiscal insights into future possibilities. Each repayment plan has certain expectations and therefore, you must choose the best home loan repayment plan that you can easily fulfil throughout the home loan tenure. Though, the easiest one to fulfil is the best one, you may also want to consult your financial consultant to ensure the same.