SBI Flexi Pay Loans Advantages and Disadvantage
There is a beneficial news for people who are looking out for various home loan options in the market by SBI. It has launched an alluring scheme for funding loans for your home, where you just need to pay the interest initially during the early phase and this will increase the loan eligibility for you up to 20%. This is like an aid for all the young salaried citizens of India.
This scheme is a savior for all the salaried people who have dream of having their own house but cannot have it due to the low salaries they fetch. Even if you cannot pay the calculated EMI for your home and you are between 21-45 years in age SBI has this beneficial scheme that can make your dream come true? The only condition that the bank has is that the person should be salaried and the amount of loan that the person has applied for should be minimum 20 lakh rupees. This is very advantageous for the borrowers who have a requirement of a bigger amount than their actual eligibility with the bank. This scheme is called as the Flexi Pay Home Loan Scheme. The other terms and calculations like interest rates and loan to value ratio is the same, according to the Chief General Manager of SBI. The conditions for application of this loan are also like any other loan application.
Advantages of SBI Flexi Pay
This loan is different and flexible as the borrower just need to pay the pre EMI or the interest for three to five years and later they need to pay a nominal amount of EMI every month to the bank. The increment in the amount of EMI will be done after every year gradually so that the borrower does not has any burden at once. The EMI will then be constant unless there is any change in the rate of interest.
The calculation of the Flexi loan is that there is an increment of 20% on the amount of eligibility for the borrower. Let’s understand it with an example. If a person has applied for the Flexi Loan for 30 lakh rupees and the time period is of 15 years then the EMI is around 24000. On the other hand application of a normal home loan will compute an EMI of Rs.31326. This different between the amount of EMI will fetch the borrower an additional loan of Rs.6 lakhs.
Moreover, the borrower also need to have funds that sum around 10-20% of the value of the property as this is mandatory before they apply for any home loan.
The bank also seeks for an authorization from the borrowers to raise the amount of the EMI if there is any increase in the interest rates. Hence the principal amount remains the same after this. This loan will only be beneficial for the salaried people who are not paid with fancy amounts and are seeking for a loan amount which is bigger than the pocket, added Jayanthi Laxmi. This loan cannot be aided with any ongoing home loan.
According to the SBI chairman, the teaser rate on home loans should be encouraged by the banks. She also proposed the same to the RBI governor during a discussion. In any Teaser Loan the interest rate is minimal during the initial years and rises subsequently, according to Arundhati Bhattacharya, but The RBI governor Rajan has not approved the same.
In the SBI flexi pay loan the interest rate remains the same and there is no increase gradually. Like any home loan it also works on the same mechanism but the only difference is moratorium on principal repayment.
The customers will be free from the liability of paying the EMI for the first three to five years and only need to pay the interest rate during that time frame. The track record of the borrowers will be checked prior the acceptance of the loan and the person has to be salaried as well. The minimum track period of two years is checked. The maximum age of the applicant can be 45 years for this loan. This is calculated on the basis that the bank gives a leverage to the borrowers to pay back the loan amount in the span of 25-30 years.
Another advantage that the customers will get is that they can pay off the loan as early as they want and there will be no penalty from the bank.
SBI is a well acclaimed name in financial services and is the largest home loan provider in the country. The bank has also boosted the home loan portfolio for its customers when there is a slum and there is a lower loan intake.
Here are the benefits and disadvantages of the Flexi Pay Home loan by SBI
|1||The customers will be free from the liability of paying the EMI for the first three to five years and only need to pay the interest rate during that time frame.||If there is a drastic increase in the interest rate, how will the borrowers pay huge amount in EMI after the moratorium period or the initial 3- 5 years where only a pre EMI was paid.|
|2||The customers will get is that they can pay off the loan as early as they want and there will be no penalty from the bank. The increment in the amount of EMI will be done after every year gradually so that the borrower does not has any burden at once.||Other financial institutions also have loan similar loan facilities with better benefits for the customers.|
|3||The bank also seeks for an authorization from the borrowers to raise the amount of the EMI if there is any increase in the interest rates.||The borrower will also not get ant tax benefit in the initial years. Moreover, they also need to pay 10-20% of the total value by their own funds.|