Disclaimer

This is to inform that by clicking on the link, you will be leaving our www.sc.com/in and entering a website operated by other parties:

Such links are only provided on our website for your convenience and Standard Chartered Bank does not control or endorse such websites, and is not responsible for their contents.

The use of such website is also subject to the terms of use and other terms and guidelines, if any, contained within each such website. In the event that any of the terms contained herein conflict with the terms of use or other terms and guidelines contained within any such website, then the terms of use and other terms and guidelines for such website shall prevail.

Thank you for visiting our www.sc.com/in

Proceed

It’s time to buy your dream house without fretting about high EMI on your home loan.

Get more square feet with lesser money with Interest-Only Home Loan

It’s time to buy your dream house without fretting about high EMI on your home loan.

Get more square feet with lesser money with Interest-Only Home Loan

You have your dream home picked out, it’s a lovely spacious residence perfect for a growing family. But then you check the cost and realise there is little chance for you to repay the EMIs, at least not at the moment. There are other options within your budget, but they are not as spacious as you would like. What can you do? You can choose your dream home with an Interest-Only Home Loan (IOHL). With this facility, you can purchase a larger space at a lesser cost. Read on to find out more.

Key benefits of an IOHL:

The key benefits of an IOHL are

1. Lower initial monthly repayments:

With regular home loans, the monthly repayments are made up of a portion of the principal to be repaid, as well as the interest component. With an IOHL, you only need to repay the interest component for a fixed period. So, if your dream home has high EMIs with a regular home loan, you can still purchase it with an IOHL as you will only repay the interest component during the initial period.

Example

You want to buy a ready-to-move-in 3 BHK flat. You need a home loan worth Rs 95 lakh. However, the EMIs on a regular home loan come up to Rs 70,204 at an interest rate of 7.5% for 25 years. At the moment, due to unavoidable circumstances, you are not able to afford such a high EMI amount.

In that case, you can opt for the IOHL facility for the same loan amount of Rs 95 lakh and an interest rate of 7.5% for 25 years. For the initial three years of the loan tenure, you can choose to pay Rs 59,375 as the monthly interest amount.

2. Use the interest-only period to pay less in the initial years till you can afford the entire EMI:

Since you will be paying only the interest in the initial period, you can use the difference amount for another investment. Suppose the regular home loan EMI had an amount of Rs 20,000 as part of the principal repayment. So, you can choose an IOHL facility where the principal repayment is postponed for three years.

During the interest-only period, you can utilise the money you are not paying the lender and invest in a Systematic Investment Plan or shares or any investment that have the potential to give you great returns after three to five years.

In this way, you can use the interest-only period to build your wealth. The difference amount can also be put toward the principal repayment when the interest-only period ends.

3. Flexible repayment schedule:

If you find that you can service both the interest and principal components of the home loan during the interest-only period, you do not have to wait to start the consolidated repayment.

An IOHL gives you the flexibility of starting the monthly repayments that include the principal amount even before the end of the interest-only period. At the end of the interest-only period, you can repay the pending amount in a lump sum or EMIs.

4. Reduced initial cash flow:

During the initial interest-only period, you will have better cash flow as you will not be paying as much to the lender as with regular home loans. The differential amount can go towards your personal needs, purchasing furniture, renovation costs, and more.

5. Get up to 80% of the total property cost as an IOHL:

An IOHL can give you up to 80% of the loan amount. Perhaps the initial cash outflow would be higher with a regular home loan. However, with an IOHL, the monthly payments are lower initially. So, you can opt for a bigger property.

The takeaway

Make your dream home a reality with Standard Chartered Bank’s Interest-Only Home Loan. With a smart financial strategy, you can plan your cash outflows so that the initial outflow isn’t heavy on your pockets.

Disclaimer

The views expressed in the article are those of Standard Chartered Bank (“SCB”) and do not constitute financial, professional or other advice. SCB, including its Directors, Officers or Employees shall not in any event be liable for any damages or injury arising merely from your reliance on any information provided here. Each bank / financial institution will have its own processes/ fees/ charges and any information contained in this Article is only indicative. Before placing any reliance on any information contained or views expressed in this Article, we would request you take all steps necessary to verify the correctness thereof. The information contained in this Article is only indicative. Each Standard Chartered Bank Product has its own terms & conditions and should be referred to in entirety. We request you to kindly visit “sc.com/in” or visit your nearest Standard Chartered Bank Branch or call on our Customer Care numbers for more details.