If you are living with a perception that home loans in India come only in two flavors-fixed or floating, its time to wake up to the reality. Keeping pace with global developments and in a race to stay ahead in the fiercely competitive home loan market, banks and Housing Finance Companies (HFC,s) have come up with innovative schemes, which provide a lot of options to a new home loan borrower. So, if you are worried about getting a home loan, read on; the banks might have something special for you.
Fixed rate or floating? Why not both
The classic dilemma to go for a fixed loan or a floating loan has perplexed the average home loan borrower since ages. Volumes have been written over the advantage one has over the other and this has only added to the confusion. Taking advantage of the situation, banks have started a home loan scheme, which offers the flexibility to choose a home loan with both the floating and fixed interest rate options. A borrower can choose a part of his home loan to be charged at a fixed rate of interest and the rest at floating rates and vice versa.
Tempted by the current fixed interest rates? Choose Smart fix
The unprecedented rise in floating rate home loans in recent years has prompted many borrowers to rethink their strategy in favour of the fixed rate home loans. If you are also one of those, who wants to take advantage of the relatively low fixed rates, but agrees with the universal opinion that floating rates are best over a long period of time, you can choose a special type of home loan, which charges the fixed interest rates for a specified period (say 3 years) and floating rate thereafter. Aptly called smart fix by some banks, this home loan scheme lets you have the best of both.
Need a bigger home? Go for a short term bridging loan
If you are dissatisfied with your existing home for any reason what so ever, and desperately want a bigger or better house, but do not want to sell your existing house before you move into the new one, a short term bridging loan can be the perfect solution. This loan fills the vital gap and provides an interim arrangement of finances between the sale of your old house and purchase of the new property. These loans can be repaid in easy installments or by a lump sum payments after you sell the old house.
Can’t afford big EMI’s now but can do it in future? Choose step-up repayment
Off late the banks and hfc’s have awaken to the fact that income levels of individuals rise as their career progresses and this improves their repayment capacity over a period of time. Hence, they have decided to offer, what is called a home loan with step-up repayment facility. This special home loan scheme provides the facility to fix the EMIs at a lower level during initial stages of the home loan and increase with tenure. Some banks even waive the principal repayment component of EMI for the initial period. So, if you are a young professional or have spent few years in a job and can convince your lender with a visible career growth, a home loan with step-up repayment facility might be the panacea.
Can afford big EMI’s now but not later? Choose step-down repayment
Consider a situation, where a couple has taken a joint home loan in India and one of them is set to retire in few years. This can create a tricky situation, when it comes to the home loan repayment, since the repayment capacity of one of the borrowers will decline after his retirement. A home loan with a step- down repayment plan can go a long way keeping troubles at bay in such a scenario. The couple can choose to repay higher EMI’s during the initial stages of home loan, when both of them are earning and when one of them retires, the burden of EMI’s can be lessened so that the repayment schedule is still maintained diligently.
This is definitely not an exhaustive list of such schemes, banks and HFC’s are regularly churning out innovative schemes, which cater to specific circumstances and help widen their home loan client base. Every such home loan scheme has its own advantages and disadvantages. Any home loan borrower must definitely shop around, compare home loan rates and gather as much information on terms and conditions of the home loan scheme so that he is able to take an informed decision.