Choose home loan options strategically

Now the things are once again rolling back again in real estate sector. Banks are offering lower rates to the new borrowers but the existing borrowers are waiting for their due rates to come down. Before applying for home loan there are certain factors like fixed, float, monthly rests, yearly rests, fees, penalties, lender, rates about which an applicant should think over. At times lenders offer numerous flexible products the applicants can go for those options also.


You can take home loan from banks for constructing a home or purchasing a ready-built house, flat or residential plot. The banks even re-finance borrowers existing loans which they might have taken from the other bank. The sanction of loan amount is based on certain factors like borrower’s age, salary, educational qualifications, credit history and previous employment track record.


If you are double earning then you can club the income of your spouse in order to increase your loan eligibility. Usually, banks only lend an amount where your monthly EMI outflow is 30 to 50 percent of your salary. Any amount exceeding than this can make repayments towards the loan a burden.

In an initial year when the borrower makes EMI payments to the lender the major portion of the money is marked for the interest repayments. As the year pass by the principal component increases.


Now days buying a house have become difficult especially for those who have started earning recently. To make possible for this segment of people to buy a house stepup loan a flexible and novel product has been designed.

In a step-up loan, a kind of home loan, varying EMIs are offered over the loan’s tenure. This loan is affordable for the young working population that has embarked on its career and holds tremendous growth prospects as during the initial period of the tenure the EMIs are small.


It is presumed that the financial status of the borrower will improve, get promotions and earn increments, as the years roll by, the EMI outflow increases. Even though EMI increase with time, it will still appear affordable for the borrower.

In step-up loan borrowers eligibility for taking loan depends upon the future earning potential so a huge amount is lend much more than his current income. Hence, those earning lesser income initially, can also afford a larger home with their loan.

There is one more option a step-down option in this the burden of EMIs comes down with time. If the borrower’s financial position is strong then he can take this option. Suppose a borrower is close to his retirement years and has a huge earning capacity, some lenders offer step-down loan products. In this the rates are huge during the initial year as the borrower can easily afford high EMI repayments. As the years roll by, the EMI installments come down.


So before applying for the home loan study all the factors requirement and financial position, select a product that best suits your needs by comparing home loan rates offered by various Banks.