The facility of Excess Repayments
One of the necessities or criteria that is fulfilled after availing of a home loan facility is the methodology of making extra repayments. For example- If you have taken a home loan of 10,00,000 your interest rate or monthly EMI after complex calculations amount to around 5% of the total amount which is 50,000. However, home loan offers the option of making extra repayments which is if you can pay more than 50,000 in a single month you would be able to encash the option of extra repayments during the home loan. Extra repayments offer borrowers the option of leveraging the financial resources available with them in monetary form thereby ensuring proper utilization of the monetary resources.
Payment of Interest only
In the case of home loan, there is no burden of paying off the actual loan amount within a short time-frame. Since the loan tenure is high ranging from about 20 to 30 years for the repayment of the principal amount, only a considerable portion of the loan amount is charged as interest payment. For example- SBI Home Loan offers borrowers the option of paying interest charges only. No other ancillary costs or expenses like processing fees and transaction fees are included in the burden of interest payment. Thus it attracts a long list of customers and makes the process streamlined and uniform.
The option of Split Rate in Home Loan
The biggest advantage which a home loan offers is the facility of split rate. Whenever a home loan is taken, the loan tenure granted is a considerable period. For the first seven years of the loan tenure, you can keep the interest rate fixed which can be decided according to the guidelines and rules mandated by the banking authority from which you are availing your home loan option. The split rate comes into play after the completion of the first seven years of the loan tenure. After its completion, you can change the percentage of interest on the loan amount and keep it variable for the remaining period. All you are doing is splitting the interest rate into two distinct halves thereby leveraging your interest payment option making the loan facility even more desirable.
Home Loan Top Up
Finally, the facility that makes a home loan option even more enviable is the top-up option that is offered along with the home loan. The top-up option refers to the additional loan facility which you can avail yourself of over the home loan facility. The Home Loan Interest Rate incurred for a home loan is an additional 0.5% to 1% of the total amount which is taken as a top-up loan thereby ensuring the facility of taking additional loan amount from the bank. For example- SBI Home Loan also offers the facility of taking additional loans during the process.
Conclusion: Home Loan has thus slowly become a dependable source of finance for the economic prospects in the country thereby bringing about development in the country and bringing about growth in the important aspects of the economy.
