Types Of Repayment Schemes For Home Loan

Though repayment schemes may seem like a home loan customization option for first time borrowers, the true purpose, however, is far from it. Repayment schemes for your housing finance are as vital as your EMIs. Just like the amount of EMIs, it determines how comfortably you will be able to repay your home loan. Housing finance companies in India offer several repayment schemes. Each is smart and helpful in its own way. It is thus essential to find a way to repay your house loan that is easiest and most convenient to you. Here are some popular schemes available:

Accelerated repayment scheme:

This is an ideal repayment scheme for professionals, small business owners and self-employed individuals. This scheme allows you to pay larger sums of EMIs if you have the funds in your account. So, if your EMI is Rs. 40, 000, you can repay Rs. 65,000, if you have extra cash available. The biggest advantage of this scheme is that you can repay your loan earlier than usual. This allows you to pay less interest, without the stress of meeting higher EMI demands.

Step up repayment scheme:

This scheme is ideal for the younger clientele. This scheme, in truth, aims at a growing category of borrowers in India. Whether the borrower is employed or has his own business, it is likely that their monthly income will grow over the tenure of the housing loan. So, the best home loan companies in India customize the repayment facility to start with the smallest EMIs, which grow with time. It allows them to borrow early, repay with a lower salary and make major repayments in their latter years.

Step down repayment scheme:

This works wonders if you are living in a joint family or have a senior member of your family as a co-applicant, an example being a father-son team. This repayment scheme allows the borrowers to pay large amounts as EMIs in the beginning of their housing finance term. Then, they can decrease the amount of EMIs over time, if needed, as other needs like health support, marriage or children’s education become more important.

There are some other repayment schemes for a house loan too. You can use tranche-based EMI options or balloon repayment options too. These kind of repayment strategies have to be chosen with a greater attention to detail, though. Once you finish the home loan eligibility process, you may think that you have got the loan. However, you must understand that the repayment scheme, HLPP and quite a few other details from the terms and conditions are still pending. So, consider it done only when you have signed on the dotted line and begun paying the EMIs.