Which home loan repayment option suits you the best?

In competitive market lenders of Home Loans innovate variety of schemes, including repayment schemes, to suit different types of prospective borrowers to attract greater number of such borrowers and fence sitters. Some of such innovative repayment schemes are given below.


Step-up Option:- This suits the “younger generation and new to employment” most. The EMI is lower in the initial stages and increases at predetermined intervals. It substantially increases the loan amount eligibility, and lower EMI matches initial repaying capacity. In assumption of steady growth in the earning of the borrower, the EMI also increases at prefixed intervals.

Step Down Option:- It is reverse of the above and suits the borrowers who are likely to retire in near future. The EMI is higher initially and is reduced at prefixed intervals, when the borrower would have retired, thus reducing post retirement outgo considerably so that he does not feel the pinch of higher EMI.

Telescopic Repayment:- It suits the younger generation having just started their careers when the loan amount to which they are eligible is less. Under this scheme they can avail loan of higher amount by increasing the tenure of up to 30 (Thirty) years. The EMI is less and the borrower has the option to pre-pay the loan when surplus fund is available.

Tranche Based Option:- Buyers of under construction property can opt for it. Generally when there is partial disbursement of loan amount, a pre-EMI interest is charged till the entire loan amount is disbursed and regular EMI starts. Under this scheme the borrower has the option to pay EMI separately for each tranche of loan disbursed and the total loan repayment period is reduced.

Pre-EMI:- To some extent it is reverse of the above but for under construction property only. The loan amount is disbursed in parts as the construction progresses and the borrower is charged simple interest called pre-EMI. It does not include the principal component. After the full loan amount is disbursed, payment of regular EMI commences.

Accelerated Repayment:- It has the flexibility of increase in EMI amount which is otherwise fixed. It suits the borrower whenever there is an increment in salary. The borrower can also make periodic payment of additional amount, over and above the regular EMI, when surplus fund is available. In this way the repayment tenure and interest outgo can be reduced.