If you are living under the impression that home loans in India come in only two flavors – fixed or floating, then it is time to understand the reality. In the race to keep pace with global developments and stay ahead in the highly competitive home loan market, banks and home finance companies (HFCs) have come up with innovative schemes that offer a host of options to the new home loan borrower.

So, if you are worried about taking a home loan, read on; Banks may have something special in store for you.

Fixed or Floating Rate? why not both? The classic dilemma of whether to take a fixed rate loan or a floating average loan has plagued home loan borrowers for centuries. Much has been written about the advantages of one over the other and this has only added to the confusion.

To take advantage of this situation, banks have introduced home loan schemes, which provide the flexibility to choose home loans with both floating and fixed rate options.

The borrower can choose to charge a portion of his home loan at a fixed rate of interest and the rest at a variable rate of interest and vice versa. Choose Smart Fix The phenomenal growth in floating rate home loans in recent years has prompted many borrowers to rethink their strategy in favor of fixed rate home loans.

If you are also one of those people who want to take advantage of relatively low fixed rates, but agree with the general opinion that variable rates are best for longer tenures,

Then you can opt for a special type of mortgage, which Charges fixed interest. Rates for a fixed term (eg 3 years) and variable rates thereafter. Dubbed Smart Fix by some banks, this home loan scheme allows you to get the best of both.

Do you want a bigger house? If you are unsatisfied with your current home for any reason, and want a bigger or better home, but don’t want to sell your existing home before moving to a new one, take a short term bridging loan, for a short period A temporary loan can be the perfect solution, this loan bridges the crucial gap and provides a temporary arrangement of funds between the sale of your old home and the purchase of a new home.

These loans can be repaid in easy installments or can be paid in lump sum after the sale of the old house.

Can’t afford big EMIs now but can in future? Progressive late repayment option Banks and mortgage institutions have woken up to the fact that people’s income levels increase as their career progresses and thereby their ability to repay over a period of time improves. Therefore, they have decided to introduce the so-called Home Loans with Escalating Repayment facility.

This special home loan scheme offers the convenience of fixing the EMI at a lower level during the initial stages of the home loan and increasing it over the tenure. Some banks also waive off the principal repayment component in Equated Monthly Installments for the initial period.

So, if you are a young professional or have a few years in your job and can impress your lender with career growth, home loan with incremental repayment facility can be a panacea.

Can you afford the big EMI now but not later? Tiered repayment option Consider a situation where a couple has taken a joint home loan in India and one of them is due to retire in a few years.

This can create a difficult situation when it comes to home loan repayments, as the repayment capacity of a borrower will reduce after he/she retires. In such a scenario a home loan with a tiered repayment plan can go a long way in keeping problems at bay.

A couple can choose to pay higher installments during the initial stages of the home loan, when both are earning and when one of them retires, reducing the burden of equated monthly payments so that they can repay Maintain the schedule carefully.