Despite many Indians’ financial hardships as a result of the pandemic, purchasing a home remains one of their top financial ambitions. After months of research, planning, and budgeting, many people use a home loan to finance their purchases.
Many people, however, fail to determine the type of house loan that will best match their loan needs and repayment capabilities. Indeed, home loan options range not only in terms of interest rate, benchmarks, processing fees, loan type, and so on but also in terms of EMI choices. Here are a few popular home loan EMI options
Home loan EMIs with a moratorium
Many banks provide house loan borrowers the option of a moratorium. This program allows borrowers to postpone EMI payments for up to five years and pay only the interest until the EMIs commence. The EMI payment is ramped up in consecutive years after it begins in this choice. You may use this service if you want higher loan eligibility and predict a rise in your income in the future to meet the step-up EMI repayment requirement. The EMI moratorium program might assist you in purchasing a home that is more valuable than your current financial situation allows.
EMI on home loans with overdraft option
Home loans with overdraft (OD) facilities are available from a number of institutions in the market. The EMI requirement is the same as for standard home loan products, but borrowers have the option to park excess money in a bank account to save on home loan interest to the extent that the funds remain in the account for the duration of the loan. As a result, borrowers have the option of using the surplus cash in their account, allowing them to maintain a higher degree of liquidity.
However, the surplus funds in the account are not eligible for tax deductions under Section 80C of the Income Tax Act. In addition, home loans with an OD facility normally have higher interest rates than regular home loan products.
Home loans with increasing EMI option
Some banks offer house loans with the option of increasing the EMI. The bank sets a lower EMI for the first few years of the loan under this sort of arrangement. After a few years, the EMI steadily rises, based on the idea that the borrower’s income will rise in tandem, allowing them to comfortably repay the loan.
The growing EMI home loan is ideal for borrowers whose income is insufficient to cover the EMI. The bank bases its calculations on the expectation that the borrower’s salary will rise in the following years, allowing him or her to comfortably repay a larger EMI. You can apply for this loan if you’ve just begun your career or have a low salary in the first few years of your profession and expect employment security and continuous income growth over the loan period. You could also increase your EMIs on a standard home loan.
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