Found your dream home and thinking of funding it with a home loan? Great idea! But what is the maximum and minimum tenure you can opt for?
Loan tenure refers to the duration where you repay the loan through EMIs. A home loan is a secured loan provided by a bank for the sole purpose of purchasing a house. Your property will act as the collateral in case of a home loan.
Due to the price of properties, home loans are generally of big amounts. And this is where the home loan tenure comes to rescue the borrower. Home loan tenures generally last for 30 or more years, making home ownership an affordable decision for all.
The ‘maximum tenure for home loan’ will vary depending on the lender. Generally, home loan tenures can go up to more than 30 years. A longer tenure translates to lower interest rates and lower EMIs. This makes the loan affordable for you.
The loan will go on for a longer period but it won’t put pressure on your expenses. There will be no rush to repay it in a short period.
Home loan minimum tenures will also depend on the lender’s terms and conditions. They can be as short as 2-5 years. This will, however, mean that the interest rate and the EMI both will be on the higher side.
You will be able to clear the loan in a short duration but it might put a brunt on your monthly expenses.
There are advantages and disadvantages of both short and long-term home loans. They are compared in the table below -
|
Criteria |
Short-Term Home Loan |
Long-Term Home Loan |
| Loan Duration | It is between 2 to 5 years | It can go up to 30 years or more |
| Loan Amount |
For short-term loans, the loan amount is generally low |
For long-term loans, the loan amount can be high |
| Interest Rate | The interest rate is low | The interest rate is high |
| EMI Amount | The EMI amount is high as the tenure is short | The EMI amount is less as the tenure is long |
| Disbursal Process and Speed | The disbursal process is easier and the amount gets disbursed faster. | The process is long and involves a lot of documentation. The amount might also take longer to get disbursed. |
There are certain factors you should consider before choosing your home loan tenure. They are mentioned below -
Your current income, expenses, and any other loans you have all factor in when you consider your financial condition. As a home loan goes on for a long time, the EMIs will affect your monthly budget. Thus, you should consider all these separately before taking a home loan.
Your age when you apply for the home loan will affect how long a tenure you can take. Your retirement age can also be estimated depending on your current age. This will give you a fair idea of which tenure to choose.
The loan amount will play a major role in choosing your tenure. If you are applying for a big amount, it will be better to select a longer tenure, so that the EMIs are not too high. In case your loan amount is small, you can choose a shorter tenure.
The interest rate affects the EMI you have to pay. And the EMI will help you decide how long a tenure should be selected.
You might be buying a property as your primary dwelling or as an investment. In both cases, the planning and tenure will be different. Thus, consider the purpose of buying the property before selecting a tenure.
A home loan is a big commitment and it can affect your finances drastically if not planned properly. You can select loan tenures anywhere between 2-5 years and 30 years.
It is important to weigh in all the factors before you select a tenure for your home loan. Everything from your current financial condition, age, loan amount, rate of interest need to be taken into account.
Selected carefully, the tenure of a home loan can make it affordable for you and not add to your financial worries.
The best tenure for home loan will vary from person to person. It depends on your current income, debt-to-income ratio, age, loan amount, etc.
Yes, you can reduce your home loan tenure. One way to do it is to prepay a part of the loan, and another is to get in touch with your lender.
Yes, you can get a home loan for 20 years. But the exact tenure will be mutually decided by the lender and you after looking at your profile and creditworthiness.
The amount of home loan does not depend on your salary alone. Things like your debt-to-income ratio, credit score, value of property, amount of downpayment, etc have a role to play in it.
Yes, the tenure matters while taking a home loan. That decides how long the loan will go on for and also your interest rate, EMIs, etc.
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