Purchasing your own home is an important financial goal in life.Having your own home also means that you do not have to deal with the whims of your landlord and move in and out of multiple homes.
Like most individuals, you may opt for a loan to buy your home. Such loans are offered by leading banks and non-banking financial companies (NBFCs). Based on certain factors, such as your income, property value, and repayment capabilities, lenders offer loans.
Home loans are repaid in equated monthly installments (EMIs). These are calculated on the loan amount, tenure, and interest rate. Generally, the EMI remains constant during the tenure (except when interest rates change). Paying a high monthly installment may be difficult and you may have to extend the tenure to reduce the EMI. However, this significantly increases the total interest you pay during the loan tenure.
How can you avoid this situation? Consider a flexi EMI home loan to ensure you do not have any difficulty in repaying the same. Here are the different types of flexi EMI loans available and their benefits.
- Step-up EMI
Generally, your income increases annually during appraisals. With the step-up EMI option, you are able to determine a schedule considering the rise in your annual income. If you are at an early stage in your career, choosing this option will enable you to buy your home without facing any trouble and you will also enjoy higher loan eligibility.
- Step-down EMI
In this option, your EMI during the initial years is higher and it gradually reduces over the years. This type of flexi EMI housing loan is advisable if you are olderand your regular monthly income reduces post-retirement. The EMI comprises interest and principal repayment. Step-down EMI option enables you to repay the loan amount quicker and reduce your financial costs.
- Bullet EMI
Under this option, you may make partial payments on your loan amount at regular intervals. When you make such payments, the EMI on the outstanding balance reduces. This helps you save a significant amount during the entire loan tenure. Bullet EMI does not entail any prepayment penalties, which is a huge benefit of this option.
- Balloon EMI
When you choose this option, you pay a lower home loan EMI during the initial loan tenure. However, at the end of the loan period, you must make lump sum balloon payments. These balloon payments may either be paid at regular intervals or at the end of the loan tenure. Balloon EMI option is advisable if you expect to receive significant cash flows at the end of the loan duration.
Flexi EMI house loans are beneficial as this option provides you with the flexibility to repay according to your capability. This ensures that you do not face financial difficulties.With this option, you will be able to easily afford your dream home.