Step up loan: Here's how you can increase your home loan amount

Did you know banks have a loan product which actually looks into your future earning potential to determine your loan amount, as one of the main parameters? It is called a step-up home loan. Simply put, it is a type of home loan, where the lender takes into account your future expected salary and thus increase your loan eligibility or the loan amount.[caption id=“attachment_1525315” align=“alignleft” width=“380”]  Flexible loans. Agencies[/caption] Example: Let’s see how this is done. Suppose, you earn a monthly income of Rs 25,000. Which means, your current eligibility for a 20-year loan is somewhere in the range of 13-14 lakh. But, when you avail a step-up loan, your eligibility can actually increase by as much as 5-30 percent. Of course, this varies from lender to lender, the industry you work in, and the future earning potential your profession or job has. Finer details: Generally, if you see we get our career growths in slots or every few years. Lenders who offer step-up loans also group the loan terms in slots. Generally, it’s a couple of years. So, in the initial few years, the equated monthly installments (EMIs) which you need to pay are much lower, and the amount gradually increases with time. The rationale behind this is that every few years, your salary will increase and you will be able to pay a higher amount towards the EMI. So, during the initial few years of the tenor of the loan, you pay a really low EMI, but by the end of the tenure, the loan EMI amount increases. As far as the cost of a step-up loan goes, it comes at a higher cost, but that’s the premium you will have to bear to avail of the facility. In fact, this loan works really well for youngsters who have just started working and looking to buy a home. Remember, lenders look for customers with good qualification and job in sectors with good growth potential.