Step-up Home Loan

A step-up home loan gives you flexibility when buying a home by starting with smaller monthly payments that increase as your income grows. Unlike a regular home loan, where instalments remain the same throughout, this option adjusts to your changing financial capacity. 

It is particularly useful for young professionals or families early in their careers who expect higher earnings in the coming years. By paying lower EMIs initially, you can manage your budget more comfortably while settling into your new home. Over time, as your income rises, the gradual increase in EMIs helps you repay the loan faster without causing financial strain.

A step-up home loan adjusts your EMIs in line with your rising income, giving you breathing space during the early years. The lender structures your repayment so that you pay smaller instalments at first—usually covering only the interest portion—and gradually increase them as your earnings grow.

Let’s understand this better with an example:

Suppose you take a loan of ₹40 Lakhs for 20 years at an interest rate of 8% p.a. With a regular home loan, your EMI would be around ₹44,822. However, with a step-up plan, you would start by paying ₹33,333 for the first two years and ₹43,748 thereafter for the next 18 years.

This means your EMIs are 20.30% lower in the beginning, making it easier to manage your finances, and later increase by about 4.60% once your income stabilises.

Loan Details	Information
Loan Amount	₹40 Lakhs
Tenure	20 Years
Rate of Interest	8.00% p.a.
EMI on Regular Loan	₹44,822
Step-up Home Loan EMI (First 2 Years)	₹33,333
Step-up Home Loan EMI (Next 18 Years)	₹43,748
EMI Difference (First 2 Years)	Reduced by 20.30%
EMI Difference (Next 18 Years)	Increased by 4.60%

A step-up loan works best if you expect a steady rise in income, as it lets you manage your initial costs comfortably while repaying the loan faster over time.

Disclaimer: The above calculation is for illustrative purposes only. Actual EMIs and terms may vary depending on the lender’s policies.

Here are the main features that make a step-up home loan a smart choice for borrowers expecting steady income growth:

Lower EMIs in the Initial Years

You begin with smaller monthly payments, helping you manage expenses more easily at the start of the loan.

Gradual Increase in EMIs

Your EMIs rise in stages to match your growing income, keeping repayments affordable and balanced.

Higher Loan Eligibility

Lenders may offer a larger loan amount by considering your future earning potential.

Interest-only Payments Initially

Some plans allow you to pay only interest in the early years, reducing financial strain while you settle in.

Customised EMI Structure

You can tailor your EMI schedule based on your income projections and career growth.

Option for Prepayment or Part-payment

You can repay early or make part-payments to reduce your loan burden without significant penalties.

Tax Benefits

You can claim deductions on principal and interest under Sections 80C and 24(b) of the Income Tax Act.

Ideal for Long Tenures

This structure works well for long-term borrowers seeking affordability and flexible repayment planning.

Step-up home loans come in a few forms, each designed to match different income patterns and repayment needs:

Interest Servicing Construct

Under this structure, you pay only the interest portion of the loan for the first one or two years, while repayment of the principal begins later. This setup is ideal for borrowers who expect their income to rise soon, as it keeps EMIs lower during the early years when financial responsibilities may already be high. Once the moratorium period ends, the EMI amount increases to include both the principal and interest, ensuring that repayment progresses steadily without sudden financial pressure.

Term Loan Construct

This option blends flexibility with discipline. After completing the initial interest-only phase, your EMIs automatically convert into regular instalments that cover both the principal and interest for the remaining tenure. The gradual rise in EMIs reflects your improved repayment capacity as your income grows. This structure helps maintain a healthy balance between affordability in the short term and full loan repayment in the long term, making it suitable for professionals with a predictable income growth pattern.

Here is how you can calculate your step-up home loan EMI easily and plan your repayments better:

1. Enter the total loan amount you intend to borrow

2. Add the applicable interest rate offered by the lender

3. Select the loan tenure or repayment period in years

4. Input the step-up percentage or specify how often your EMI will increase

5. Click the ‘Calculate’ button on the online tool to view the results

6. Review the estimated EMI for the initial years and the revised EMI for later years

7. Check the total repayment amount, including both interest and principal, to understand your overall loan cost

Here are the general requirements you must meet to qualify for a step-up home loan:

• You should be between 21 and 70 years of age at the time of loan maturity.

• You must be a resident Indian with valid identity and address proof.

• Both salaried and self-employed individuals are eligible to apply.

• You should have a stable and regular source of income.

• A good credit score (usually 700 or above) increases your chances of approval.

• Your loan eligibility depends on your current income and future earning potential.

• Most lenders finance up to 75%–90% of the property’s market value.

• The loan tenure typically ranges from 10 to 25 years, depending on your age and income.

• You may need to show employment or business continuity for at least 2–3 years.

Here are the essential documents you need to submit when applying for a step-up home loan:

Document Type	Description
Proof of Identity	PAN Card, Aadhaar Card, Passport, or Voter ID
Proof of Address	Recent utility bill, rent agreement, or property ownership document
Proof of Age	Birth certificate, passport, or any official ID with date of birth
Income Proof (Salaried Applicants)	Latest three months’ salary slips and Form 16
Income Proof (Self-employed Applicants)	Last two years’ Income Tax Returns and audited financial statements
Bank Statements	Last six months’ bank statements showing salary or business income
Proof of Additional Income	Rent receipts, investment income, or other supporting income documents
Property Documents	Sale deed, title documents, and approved building or layout plan
Passport-size Photographs	Recent colour photographs for verification and records

Here is how you can apply for a step-up home loan on Bajaj Markets quickly and without complications:

1. Visit the Bajaj Markets Step-up Home Loan page

2. Click on the ‘Check Offer’ button displayed at the top of the page

3. Enter essential details such as your requirement type, profession, mobile number, and property status

4. Review the information you’ve entered and ensure all details are accurate

5. Read and accept the terms and conditions before proceeding

6. Click on the ‘Apply Now’ button to submit your application

7. A Bajaj Markets representative will contact you to guide you through the remaining steps

Here is a quick comparison to help you understand the main advantages and drawbacks of step-up home loans clearly and make an informed borrowing decision:

Pros	Cons
You can qualify for a higher loan amount since lenders consider your future income growth	You may end up paying more total interest over the full loan tenure
The lower EMIs in the initial years make repayment easier while managing other expenses	If your income does not rise as expected, higher future EMIs can create financial stress
It improves loan eligibility for young professionals starting their careers	The risk of default may increase if financial circumstances change unexpectedly
You can enjoy tax benefits on both principal and interest under the Income Tax Act	Floating interest rates can increase future EMIs if market rates rise
The flexible repayment structure supports long-term financial planning	Longer loan tenures may extend your overall repayment period and total cost

A step-up home loan is best suited for individuals who are at the early stages of their careers and expect their income to rise steadily over time. It works well for young professionals, first-time homebuyers, and newly married couples who want to own a home without facing high EMIs at the start. This loan type also benefits those working in industries with predictable salary growth, such as IT, banking, or government services.

Self-employed individuals with expanding businesses can also benefit, as their income typically grows with time. Since the repayment pattern aligns with your earning potential, a step-up home loan offers a flexible and realistic way to manage long-term home financing without straining your finances in the initial years.