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A home loan is a reliable way for a person to purchase a house. Everyone wants the permanence and the security that their own home offers but the factors associated with a home loan can be quite daunting to some. One such factor is the tenure of the loan, or the number of years for which you have to pay the EMIs. Read on to find out whether you should opt for a short term or a long term loan and some other home loan repayment tips .
Factors to consider when deciding your tenure
Your monthly income
Let’s face it, the Equated Monthly Installments of your home loan will take out a sizeable chunk out of your monthly income. Therefore, your income plays a huge role in the tenure period that you decide, A short term loan means that you will have to pay much higher EMIs, so your monthly income has to bear the load of the EMI as well as other expenses. On the other hand, a longer tenure will lighten the EMI amount, which shall be less of a burden on your income.
Your age
Your age plays a vital role when banks decide a tenure for your home loan The younger you are, the more years you can work and earn a salary, thus allowing you a longer tenure. However, if you’re more in the middle ages of 50 or so years, banks do not give you the leeway of a longer tenure since you would approach retirement sooner.
Interest Rate
Yet another major factor that directly affects the tenure is the rate of interest of your home loan. The rate of interest applied is on per annum basis, which means that the longer your tenure is, the higher will be the total interest that you pay by the end of your loan tenure. You can easily calculate your interest and tenure by using acalculator home loan repayment calculator available online.As is evident from the factors that ultimately decide your home loan tenure, both short and long term loans have their advantages. Some people with multiple sources of income want their home loan repaid and done and dusted quickly, so they choose a shorter tenure. Others who wish to have lower EMIs can choose longer tenures. Ultimately, the bank will keep the above factors in mind before offering you the tenure options. Use an online home loan repayment tenure calculator when you plan your loan and then choose your tenure wisely.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.