Types Available for Home Loan Repayment
From old times till now and in the era's to come, owning a home has been and will remain a valuable investment. However, mismanagement of funds often deprives some people off buying their own homes. For such people, a home loan is a blessing that helps them fulfill their housing dream. Though borrowing a home loan is easy, it is the repayment of the loan that counts and adds to the financial health of an individual. Various ways to repay a home loan are listed as follows:
Opting between a fixed or floating repayment plan: A fixed repayment plan is one where the EMIs are fixed due to the fixed rate of interest. A floating repayment plan is one where the EMIs fluctuate with the interest rates that change with the market standards.
Step-down repayment option: In the step-down repayment option, the home loan EMIs reduces as the loan tenure moves to the end. It is ideal for people who are near retirement as they pay more in the initial days and less in the later loan period.
Step-up repayment option: In the step-up repayment option, the home loan EMI increases as the loan tenure moves further. It is ideal for people who are at their early stages of career since the loan EMI is lower in the initial period and larger in the later period.
Refinance loans: Going for refinance loans means opting for a loan with a lower rate to pay the home loan EMIs. A refinance home loan can boost one's credit reputation if managed well.
Prepayment or foreclosure: Prepayment is paying off part of a home loan in advance, while the foreclosure is paying off the loan amount in full. Both prepayment and foreclosure are repayment options that may lower the EMI burdens on the borrowers.
Additional Reading:- Different Options Available for Home Loan Repayment
On a concluding note, what matters most in the loan process is the repayment of a home loan. However, the repayment can be managed well if the borrower chooses a repayment wisely and under his financial capabilities.
Opting between a fixed or floating repayment plan: A fixed repayment plan is one where the EMIs are fixed due to the fixed rate of interest. A floating repayment plan is one where the EMIs fluctuate with the interest rates that change with the market standards.
Step-down repayment option: In the step-down repayment option, the home loan EMIs reduces as the loan tenure moves to the end. It is ideal for people who are near retirement as they pay more in the initial days and less in the later loan period.
Step-up repayment option: In the step-up repayment option, the home loan EMI increases as the loan tenure moves further. It is ideal for people who are at their early stages of career since the loan EMI is lower in the initial period and larger in the later period.
Refinance loans: Going for refinance loans means opting for a loan with a lower rate to pay the home loan EMIs. A refinance home loan can boost one's credit reputation if managed well.
Prepayment or foreclosure: Prepayment is paying off part of a home loan in advance, while the foreclosure is paying off the loan amount in full. Both prepayment and foreclosure are repayment options that may lower the EMI burdens on the borrowers.
Additional Reading:- Different Options Available for Home Loan Repayment
On a concluding note, what matters most in the loan process is the repayment of a home loan. However, the repayment can be managed well if the borrower chooses a repayment wisely and under his financial capabilities.
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