A home loan is a long term relationship between the borrower and lender. Due to it being a secured loan type, the lender offers customized repayment solutions which can help reduce EMI burden off the borrower. There are many flexible repayment plans of which the step-up and step-down are very popular.

What is a step-up repayment plan?

A step-up repayment plan will see the EMI component increasing with each year of the home loan tenure. In this plan, the borrower pays a smaller EMI in the initial years of the home loan and as the tenure reaches the midpoint, EMI will begin to get higher until the last year of the home loan.

This plan is good for individuals whose salary/income increases surely each year.

What is a step-down repayment plan?

A step-down repayment plan will see the EMI component decrease with each year of the home loan tenure. In this plan, the borrower pays a higher EMI in the initial years of the home loan and as the tenure reaches the midpoint, EMI will begin to decrease until the last year of the home loan.

This plan is good for individuals who are nearing retirement. Since in the initial employment years, they can afford to pay higher EMI and as they near retirement, they can pay lower EMI. This plan also fits cases where joint home loan is taken. Children and parents can take this loan and continue with home loan repayments.

Are these the only options?

No. There are more such options. Usually, individuals are unaware of repayment options and hence we at Ruloans want to create awareness with regards to home loan repayment options. Choose the type of repayment which fits your financial plan.