Home Loan with EMI Waiver: Should You Take It

Real estate prices are down and it’s time for the dream home. If affordability is a problem, opt for a home loan. Home loan helps get the dream home at a young age. LIC Housing Finance has launched a home loan scheme which is great for borrowers. You enjoy EMI waivers during the loan tenure. If your income is going to rise, then home loan EMI waiver is a great idea. The LIC Housing Finance 2020 offer is available only for ready-to-move houses. Is home loan EMI waiver a free lunch? Let’s find out.

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Home Loan with EMI Waiver: Should You Take It?

How Does Home Loan EMI Waiver Work?

Home Loan EMI waiver has 6 EMIs waived during the loan tenure. This is two EMIs waived at the end of the 5^th, 10^th and 15^th year. The borrower must make regular repayments with no pre-payment for the first 5 years.

Home Loan EMI waiver is applicable for ready-to-move apartments and OC or the Occupancy Certificate is a must. The Maximum loan tenure must be 30 years and the loan amount up to Rs 5 Crore. This offer is available only for a limited time period till February 29^th. The home loan disbursement must take place before March 15^th 2020.

Axis Fast forward offers home loans to purchase an under-construction, ready-to-move or resale apartment. Loan tenure is around 20 years with a minimum loan amount of Rs 30 Lakhs.

See Also: How Does a Home Loan EMI Calculator Work?

After you pay home loan EMIs for 10 straight years, EMIs for the subsequent 6 months are waived off. After completion of 15 years another 6 months EMIs are waived off.

Axis Bank also offers the Shubh Aarambh Home Loan. This scheme has a maximum loan amount of Rs 30 Lakhs and targets borrowers who seek affordable homes. The Shubh Aarambh Home Loan waives off 4 home loan EMIs at the end of the 4^th, 8^th and 12^th year.

You can buy a ready-to-move apartment, resale or an under-construction property with Axis Bank Shubh Aarambh Home Loan. The minimum home loan tenure is 20 years with a maximum home loan amount of Rs 30 Lakhs. With two Axis home loan schemes, a total of 12 EMIs gets waived off.

See Also: How to Select The Best Home Loan in India? What Should I Consider?

Axis Bank Home Loan Schemes offer loans at 8.55% and 9.2% a year on floating rate home loans for salaried employees. Its 12% for fixed rate schemes. It’s higher for self-employed borrowers with interest rates of 8.65% and 9.4%. LIC HF charges interest rates of 8.10% depending on borrower risk profile and credit score.

Home Loan with EMI waiver is for the long term. It’s for those with a modest income and those who can’t pre-pay home loans. If you stick for the entire home loan tenure, you are rewarded with home loan EMI waiver.

See Also: Why is Your Home Loan EMI Still High?

What’s the Catch?

Home Loan with EMI waiver makes it difficult to prepay loans. Shubh Arambh doesn’t allow you to prepay a large amount which would reduce loan tenure to 3 years and 11 months. For Axis Fast Forward Scheme its 9 years and 11 months. LIC HF doesn’t allow even partial pre-payment till first waiver of 5 years is due.

Home Loan EMI waivers have a major catch. They don’t allow prepayment when you get savings, annual bonus and so on.

See Also: Ways to Reduce Your Home Loan EMIs by the Experts of IndianMoney.com

Why Home Loan EMI Waiver is Not Good?

• If you are in the early 40’s, loan tenure could extend well into retirement. Banks also don’t sanction home loan to this age group.
• Prepayment is discouraged. This is not good as sound financial planning requires you to clear debt as soon as possible.
• RBI encourages prepayment by waiving off pre-payment penalties. If income rises always look to pre-pay home loan. Except for millennials who like to stretch home loans, home loan EMI waiver which discourages prepayments is not good.

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