When you consider buying a home, the biggest thing is getting a home loan. You will, of course, want the home loan with the lowest interest rate. If you can get flexible options that will help you pay lower interest on your loan that will be great, right? Here are some home loan options that you can look at if you are going for a home loan.
Flexi home loan
Smart saver home loan, home saver loan or flexi loan is a loan where your loan account will be linked to a current account. So, this will be like having an overdraft loan. You can add funds to the current account which will help reduce your interest outgo. How? When you have some excess money and you park it in the current account, this amount will be reduced from your principal and the interest will be calculated on this adjusted principal. You can withdraw funds from the current account whenever you want. The more amount you deposit the lesser will be the interest that you need to pay.
However, you should understand that the interest rates for these loans might be a bit higher than traditional home loans. If you are someone who will be having surplus money often, then it makes sense to go for this option of home loan.
Interest rates for home loans have already started increasing. So, there are many lenders who offer teaser loans along with certain builders. Teaser loans are home loans that have fixed interest rate for a certain period of time. This might be anywhere from one year to three years. After this period, the loan will be a floating home loan where the rate will be linked to the Marginal Cost of Lending Rate (MCLR) if it is a bank or Prime Lending Rate (PLR) if it is a non-banking company.
In case lenders are offering you such loans at present interest rates, you can consider it as lending rates are being hiked by all lenders. Only in a rising interest rate scenario, it makes sense to go for a teaser home loan.
Tranche EMI option
The bad part about going for an under-construction home is the pre-EMI that you might have to pay. This is the EMI that you have to pay even though the construction might not be complete and the whole loan amount has not been disbursed to the builder. The actual EMI starts only after the whole loan has been disbursed. The pre-EMI will go only towards the interest portion of your loan. If the project gets delayed, the pre-EMI amount might be much more than what you initially thought it will be. This is when a tranche EMI option can help.
Under tranche EMI, you will start paying the EMI after the first tranche of the loan is disbursed. The interest will not be on the loan amount sanctioned but will be only on the loan amount that has been disbursed. So, as the loan gets disbursed, your EMI will go up. Both the interest and the principal component in tranche EMI will be based on the amount disbursed.
Not all lenders offer the tranche EMI option. You have to check if this option is available when you go for a home loan.
Proportionate release option
The down-payment is always an issue if you haven’t saved enough to buy a house. There might be times when you have been sanctioned a home loan but you are falling short of the down-payment amount. Your home loan will be sanctioned only after you make the down-payment. This is where the proportionate release option will help.
Using this option, you can make the down-payment in instalments. Based on this, the loan will also be disbursed to the builder in instalments. So, you have the flexibility to manage your finances and save for the down-payment.
Bridge home loan is another option that you can consider for the down-payment. Read this post for more information – What Is A Bridge Home Loan And How You Can Avail Of It.