5 things to know before you approach a house lender: EMI


The borrower’s financial condition may drastically alter over time. As a result, it is usually preferable to maintain flexibility when entering into a contract with a lender. Your goal should be to complete the loan as soon as possible through prepayments, but you should also look at EMI payment choices when choosing a lender. 

The EMI is a predetermined amount that you must pay to the lender each month once you have obtained the loan.

In addition to the standard EMI choice, here are a few more home loan repayment alternatives to consider.

1.         A home loan having a delayed start date for EMI payments.

When applying for a house loan, you may choose a Flexipay loan, in which the EMI begins at a later date. There is an option with this house loan to go for a moratorium term of anywhere between 36 and 60 months during which the borrower does not have to pay any EMI but only the pre-EMI interest.

            In comparison to a traditional house loan, this loan offers a larger loan amount of up to 20%. This type of loan is only offered to salaried and employed professionals between the ages of 21 and 45.

2.         The home loan is connected to a bank account.

Any money you retain in your current account works to your benefit by lowering your interest load. The amount of surplus cash in your current account determines your home loan’s interest liability. 

Home loan interest will be computed on the outstanding balance of the loan less the balance in the current account. Although the interest burden is significantly decreased, such loans have a somewhat higher interest rate when the EMI is calculated.

3.         Increasing EMIs on a home loan

The repayment is expedited in proportion to the anticipated rise in your income. Paying higher EMIs helps to reduce the interest load since the loan is paid off sooner. 

You can get a larger loan and pay cheaper EMIs for the first few years with these loans. The repayment plan, on the other hand, is tied to the projected rise in one’s income.

4.         EMIs on a home loan are dropping.

Some loans are arranged such that the EMI is greater in the early years and then lowers in the later years. The interesting part of the EMI is higher in the early years. A higher EMI entails a greater outlay of interest in the first years. As a result, have a prepayment plan ready to settle the debt as soon as the EMI begins to decrease.

5.         Home loan with EMI waiver

Some lenders provide incentives to customers who have paid their EMIs on time and without missing any payments. Some lenders provide house loans in which a specific number of EMIs are forgiven if all other EMIs are paid on time. Keep track of any special conditions and the processing cost to determine whether they are comparable to other lenders.

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