Home purchase loan, home improvement loan, home extension loan, land purchase loan, home conversion loan, bridge loan and balance transfer loan, are some flavours. Depending on your requirement, you can avail any of these loans.
Go For a Loan That Suits Your Needs - Secured Homeowner Loan
By [http://ezinearticles.com/?expert=Kirthy_S]Kirthy S
Banks offer a variety of home loans. Home purchase loan, home improvement loan, home extension loan, land purchase loan, home conversion loan, bridge loan and balance transfer loan, are some flavours. Depending on your requirement, you can avail any of these loans. To make their products attractive, some lenders package freebies with their products like free property or accident insurance, waiver of prepayment penalty and so on.
Lenders offer a plethora of options for the prospective homeowners. You can choose from numerous schemes that suits your financial needs, age and risk appetite. Fixed, floating, hybrid, step-up, step down-they are aplenty.
Fixed or floating?
The first dilemma that pins a borrower down is the choice between fixed and floating rates. In case of fixed rate of interest, the rate of interest remains unchanged for the entire duration of the loan. This means you do not benefit, even if rates of interest drop in the market. On the brighter side, you won't have to shell out a penny more, even if rates are moving up. Ideal choice that it may appear, it has its own drawbacks. They come with a reset clause that empowers banks to increase the rate of even a fixed rate loan.
Further, these are a few points more expensive than a floating rate loan.
Floating rate of interest fluctuates in sync with the market lending rates. The borrower can end up paying more than the budgeted for, if the lending rate goes up. Floating rates are for borrowers who can anticipate rate fluctuations and stay calm in turbulent times.
Hybrid Loan
This is a combination of both - fixed as well as floating rates. It is sometimes referred to as partly fixed, partly floating home loan. Under this scheme, a part of your loan is locked under fixed and the remaining is exposed to the adjustable rate of interest-the floating rate. The borrower can decide what percentage he wants to expose to fluctuations in rate and what percentage must be locked as fixed.
Step up loan:
This is flexibility, innovative product designed specially for young borrowers. It offers varying equated monthly instalments (EMI) spread over the loan's tenure. During the initial years of the tenure of the step up loan, the EMIs are small. This makes the loan affordable for the young workforce that has started making money and holds tremendous growth prospects. As the years roll by, the EMI outflow increases. It is assumed that the borrower will grow up the corporate ladder, get promotions and earn high increments. Hence, though EMI increases with time, it remains affordable for the borrower.
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Kirthy Shetty, expert author of finance domains, Platinum status
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