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Payment Options

Housing finance companies or banks have customized monthly payment options to suit every individual's requirement and also repaying capacity with some tax benefits. These repayment facilities among home loan options are specific to national and corporate banks depending on the state location. They have thereby come up with more flexible and Multiple Repayment Option.

A few among them are:

Step-up Repayment Facility:

The objective of this home loan payment option of step-up repayment is to provide the borrower with a repayment schedule, which is linked to expected growth in income. It helps a customer get a larger amount of loan allowing the customer to avail of a higher amount of loan and pay lower EMIs in the initial years. This monthly payment option, therefore, is subsequently accelerated proportionately with the assumed increase in his income.

Flexible Loan instalments Plan:

This home loan payment option offers a customized solution to suit the needs of customers whose repayment capacity is likely to alter during the term of the loan. In cases when a borrower is nearing retirement, the loan is structured in such a way that the EMI is higher during the initial years and subsequently decreases in the latter part proportionate to the reduced income of the customer. This helps varied customers combine their incomes to take a long term home loan where in the instalment reduces upon retirement of the borrower.

Tranche Based EMI:

According to this monthly payment option, customers purchasing an under construction property, need to pay interest i.e. on the loan amount drawn based on level of construction till the property is ready. Tranche Based EMI is a special home loan payment option facility offered by some banks to help customer save this interest. Customers can fix the instalments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amount drawn. Anything over and above the interest paid by the customer goes towards principal repayment. The customer benefits by starting EMI and hence repays the loan faster.

Accelerated Repayment Scheme:

Accelerated Repayment Scheme of home loan payment option offers you a great opportunity to repay the loan faster by increasing the EMI. Whenever you get an increment, increase in your disposable income or have lump sum funds for loan prepayment, you can benefit by Increase in EMI means faster loan repayment

Saving of interest because of faster loan repayment

The monthly payment option also allows you to invest lump sum funds rather than use it for loan prepayment. The return from the investments also gives you the comfort of paying the increased EMI.

Balloon Payment:

This monthly payment option called 'Balloon Payment' is an augmentation tool offered by the financial institutions, which helps in increasing the loan eligibility of the customer without increasing the EMI by assigning securities like National Savings Certificate (NSC), LIC policies etc. The present value of the maturity amount of assigned securities is combined with the loan amount to arrive at the enhanced loan eligibility. This home loan payment option allows calculation of EMI to be done on the net loan amount which amounts to the total loan less the present value of the maturity value of the securities.

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