Availing a home loan requires meticulous planning. You must choose the right lender, and most importantly, you must assess your finances to make repayment easy. Today, for the benefit of the borrowers, lenders offer different repayment options. Read on, to know more:
Today, home loan lenders in India offer a variety to customer-centric services to ensure that people have a happy borrowing experience. One of the most prominent services provided is the flexibility to choose a repayment method to suit their needs. Today, you can choose from different EMI (Equated Monthly Instalments) options based on your financial needs and goals. Understanding the various repayment options and knowing their features will help you make an informed decision.
SURF – Step-up Repayment Facility
Most lending institutions in India offer the SURF EMI facility wherein the EMI repayment is linked directly to the potential growth of the borrowers’ income in the future. As per SURF norms, the EMIs increase gradually after a few years, which is in proportion to the expected rise of the borrowers’ income.
This type of home loan repayment option is ideal for young borrowers as their scope of growth in income is much higher than people who are in their 40’s and 50’s. The young borrowers can buy a home and initially pay lower EMIs, and as their income increases, they can increase the EMI and repay the loan quickly.
FLIP – Flexible Loan Instalments Plan
FLIP, which is also known as Step Down EMIs, is another common repayment option offered by home loan lenders in India. Under this repayment option, the loan is structured in a way that the EMI is higher during the initial years, and it decreases gradually over the years. So, in a nutshell, FLIP is precisely the opposite of SURF.
This type of repayment option is suitable for people who wish to have zero financial liabilities after retirement. Generally, post-retirement people’s income and their repayment capacity reduce and it can be difficult for them to afford the home loan EMIs. Therefore, step down EMI option would reduce their repayment burden. To know exactly how much will your EMI during the initial years, you can use the home loan calculator. It is an easy-to-use tool. You must enter details like loan amount, tenure, interest rate and the tool calculates the EMI within seconds.
Tranche Based EMIs
Usually, when loan borrowers purchase an under-construction property, the pay pre-EMIs wherein they pay only the interest component of the loan until they get the possession of the property. But, under the Tranche based EMI option, the borrowers can also start repayment of the principal component immediately.
One of the crucial things to know about the Tranche based EMI repayment option is that the principal amount prepaid in the pre-construction period is not eligible for a tax deduction. But, after receiving the possession, the interest paid during the pre and post-construction period can be claimed for a tax deduction. The maximum deduction you can claim in a financial year is two lakh Rupees.
Accelerated Repayment Scheme
This home loan EMI repayment option allows you to increase the EMI amount as your income increases. This option is excellent for young employed professionals; they can gradually increase the EMI as they make progress in their career and earn a higher income. Increasing the EMI helps you repay the loan faster.
Telescopic Repayment Option
The telescopic repayment option is the best choice for people with low income and people who cannot afford to pay a high EMI. It allows you to get the loan for a maximum duration, that is 30 years, which means lower EMIs throughout the tenure.
Thus, with so many repayment options to choose from, make sure to assess your needs and financial goals thoroughly and select the right repayment option that suits you the best.
