Home Loan Tenure

Home loan tenure is the period over which you repay your loan through Equated Monthly Instalments (EMIs). With several lenders available on Bajaj Markets, you can choose tenures ranging from 12 to 32 years.

A longer tenure lowers your monthly EMIs but increases the total interest payable, whereas a shorter tenure results in higher EMIs with lower overall interest costs. The choice of tenure needs to align with your repayment ability and financial goals.

Here are the key differentiating points between a long-term home loan repayment tenure and a short-term home loan repayment tenure.

Choosing between a short-term and long-term home loan tenure depends on your financial goals, income stability, and repayment capacity. Each option carries distinct advantages and disadvantages that influence your EMI amount, total interest payable, and overall financial flexibility.

Here are the key advantages and disadvantages

Advantages

• Manageable EMIs vs. Faster Repayment
  Short-term loans enable you to repay your debt faster and achieve mortgage-free status sooner.
• Interest Savings
  Short-term loans typically result in lower total interest payments. They also minimise exposure to fluctuating interest rates, yielding significant savings over the loan tenure.
• Financial Flexibility
  Short-term loans free up funds more quickly for investments or retirement planning.

Disadvantages

• Higher EMIs vs. Total Interest
  Short-term loans come with higher monthly EMIs, which may strain your budget.
• Impact on Cash Flow and Flexibility
  Large EMIs in short-term loans can limit funds available for emergencies or discretionary spending.
• Reduced Tax Benefits
  Short-term loans may yield smaller tax deductions due to lower interest payments. This can limit the total tax benefits compared to long-term loans.

Advantages

• Manageable EMIs vs. Faster Repayment
  Long-term loans come with lower monthly EMIs, making repayments easier to manage.
• Higher Loan Eligibility
  Smaller EMIs in long-term loans may allow lenders to approve higher loan amounts. This increases your capacity to acquire a more valuable property.
• Financial Flexibility
  Extended tenures in long-term loans facilitate the management of other financial goals and obligations.

Disadvantages

• Higher EMIs vs. Total Interest
  Long-term loans, while offering lower EMIs, result in higher overall interest payments.
• Impact on Cash Flow and Flexibility
  Long-term loans extend your debt commitment, reducing long-term financial flexibility.
• Reduced Tax Benefits
  Long-term loans may offer higher tax deductions due to larger interest payments, but they also keep you tied to debt for longer.

Some of the factors you can consider while choosing an ideal repayment tenure are as follows:

• Age

Your age is a crucial factor when choosing a home loan tenure. You may opt for a longer tenure if you are young, since you have more working years ahead. On the other hand, you may consider a shorter tenure if you want to clear your dues before retirement.

• Required Amount

The amount you borrow influences your repayment period. If you opt for a higher loan amount, you may need a longer tenure to pay your EMIs comfortably. Conversely, choosing a shorter tenure is ideal if you have opted for a lower loan amount.

• Interest Rate

If you have opted for a long-term loan, lenders might charge a lower interest rate since your loan is spaced out over a longer period. On the other hand, lenders charge a higher rate to compensate for the shorter period and the reduced interest earned.

• Home Loan Type

Different types of home loans affect interest rates and EMI structures. It is important to consider the loan type before finalising the tenure to ensure it aligns with your repayment strategy.

• Monthly Income

Your monthly income plays an important role in determining your repayment capacity. In case you have a higher income, you can choose a shorter tenure as you can manage higher monthly instalments. 

On the contrary, with a lower income, choosing a longer tenure is better as it reduces the risk of default.

• Options for Prepayment and Foreclosure

Before finalising your loan, review the lender’s terms and conditions regarding prepayment and foreclosure. Opting for a longer tenure with flexible prepayment options can be advantageous if you plan to make lump-sum payments or anticipate future windfalls. 

This approach allows you to reduce both principal and interest without increasing your EMIs. 

Here are some tips to help you choose the best home loan tenure for smooth loan repayment:

• Assess your financial situation before choosing a loan tenure, as unstable finances can increase the risk of default and penalties

• Check your credit score and report, since a good score may allow you to negotiate for a shorter or longer tenure

• Choosing a realistic loan amount that aligns with your repayment capacity, as it directly affects the tenure you can manage comfortably

• Go with long-term goals, ensuring the loan tenure aligns with your life plans for smoother repayment

• Choose a loan tenure that matches your long-term goals, making repayment smoother
   

Choosing the right tenure for your house loan is crucial, as it can help you save a lot of money in one way or the other. To see which tenure would be right, you can use the home loan EMI calculator on Bajaj Markets.

Leading lenders offer flexible home loan tenures on Bajaj Markets, helping you choose a plan that fits your repayment capacity and financial goals.

Disclaimer: The details mentioned above are subject to change at the lender’s discretion.