How to Pick the Best Home Loan Tenure to Suit Your Pocket

Q: Is it possible for me to choose a home loan tenure of 40 years?

Lenders typically provide a maximum home loan tenure of 30 years, but the actual duration may vary based on your age and the policies of the specific bank you choose. It is advisable to inquire with your selected lender to determine the maximum home loan tenure they can offer based on your circumstances.

Q: Can I close my home loan before my home loan tenure ends?

Lenders provide home loan pre-closure facilities, allowing borrowers to pay off their home loan before the scheduled tenure ends. By paying the entire outstanding loan amount, along with any applicable pre-closure charges, borrowers can complete the pre-closure process. The specific charges for pre-closure may vary among different lenders.

How to Pick the Best Home Loan Tenure to Suit Your Pocket

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5 min 29 Jun 2023

Highlights

Home Loan Tenure: Meaning
Home Loan Tenure: Types and Scenarios
Choosing between the Right Home Loan Tenure: Short, Medium and Maximum

What Is a Home Loan Tenure?

Prospective homebuyers opting for a Home Loan should carefully plan to ensure a smooth repayment experience. Since the loan amount is usually sizeable, being financially responsible becomes important. Borrowing wisely and cost-effectively is key for a default-free repayment process.

The Home Loan tenure is simply the repayment window during which you need to repay your Home Loan in EMIs. Given the usual size of funding, certain lenders allow you a tenure that ranges up to 30 years to make it easier for you to repay at your own pace. However, a repayment tenure is comfortable only when it meets your financial and repayment capacity.

To help you understand this better and determine the Home Loan tenure that’s right for you, here’s a breakdown of a few options

Home Loan Tenure: Types and Scenarios

Short-Term Home Loan

With this option, your repayment window is shorter compared to long-term loans, which has its advantages as well as its disadvantages. Since you’re repaying your Home Loan over a shorter period, you are not paying as much interest, which means that the total cost of the loan is reduced significantly. However, to repay the loan in such a short window, your EMIs are significantly higher.

Choose a short-term Home Loan only if you’re financially strong and can handle hefty EMIs without any hassle.

Medium-Term Home Loan

A medium-term Home Loan strikes the balance between both ends and usually spans up to 15 to 20 years. Such tenures enable you to optimise your interest outgo most effectively by paying reasonably sized EMIs and still saving on your total interest outflow. If your finances allow it, such tenures are recommended, and you can consider opting for it to save throughout repayment. You can use online tools, such as the Home Loan EMI Calculator  for an accurate assessment of your repayment capacity against your current financial standing.

Maximum Home Loan Tenure

A maximum Home Loan tenure is the most any lender can allow you to repay your loan amount. It typically ranges up to 32 years, breaking your repayment amount into smaller EMIs – comfortably paced out over the period. However, given the duration of the repayment process, you are also likely to accumulate a greater amount of interest paid, which ultimately raises your overall cost of borrowing.

If you are looking for convenient repayment, opting for a maximum Home Loan tenure is a good option.

These are generally the three Home Loan tenure options that you can choose from. Ensure that you choose the right tenure based on your repayment goals and capabilities.

Here is an example to illustrate the differences in EMI and interest payable for the different types of Home Loan tenures:

Loan Amount

Tenure

EMI Amount

Interest Rate

Interest Payable

Total Amount

Rs.1,00,00,000

5 years

Rs. 1,98,720

7.15%*

Rs. 19,23,227

Rs. 1,19,23,227

Rs.1,00,00,000

15 years

Rs. 90,724

7.15%*

Rs. 63,30,234

Rs. 1,63,30,234

Rs.1,00,00,000

32 years

Rs. 66,363

7.15%*

Rs. 1,54,83,395

Rs. 2,54,83,395

Disclaimer:- The interest rate considered here, and its subsequent calculations are for illustrative purposes only. The calculations and actuals will differ basis the individual’s profile and loan requirements.

Your income (current and prospective)
Your monthly expenses (both fixed and fluctuating)
Your savings (current and future)
Your age (which helps you understand the earning years ahead of you)
Current interest rate

What Should You Keep in Mind While Selecting Your Home Loan Tenure?

The following are the important factors that should be kept in mind while choosing an ideal Home Loan tenure:

Your current earnings vs. the expenses: It is obvious that your income will determine your capacity to spend each month. If your monthly income is high, you can go for a shorter tenure and likewise, for a modest income, you can go for a longer tenure. Depending on your loan amount requirement and the debt-to-income ratio, the lenders can decide the best tenure for the Home Loan for you.
Your age at the time of borrowing: Even though the maximum loan tenure most lenders offer is around 30 years, there is a cap to the maximum age by which you can repay the Home Loan too. If you are young, you can choose the longest tenure and pay the EMIs at your convenience. The more you age, the shorter your tenure and the higher your EMIs.
The property you buy: The property you buy should not only match your current income but also the income possibility in the coming years. You should definitely aim for a good house, but you should also consider other life expenses that would rise in the future. Look for a property that suits your needs and gives you the best possible tenure.

Must Read: How To Reduce Home Loan EMI

Final Words

Bajaj Housing Finance Home Loan comes with several features and benefits. With our loan, you can get an attractive Home Loan interest rate and a flexible tenure ranging up to 32 years, basis eligibility. This allows you to choose a repayment plan based on your goals. It also allows you to make pre-payments or foreclose your Home Loan with no additional cost if you are an individual borrower with a floating interest rate.

To start your journey as a homebuyer, apply online today.

*Terms and conditions apply.

Frequently Asked Questions

Lenders typically provide a maximum Home Loan tenure of 30 years, but the actual duration may vary based on your age and the policies of the specific bank you choose. It is advisable to inquire with your selected lender to determine the maximum Home Loan tenure they can offer based on your circumstances.

Lenders provide Home Loan pre-closure facilities, allowing borrowers to pay off their Home Loan before the scheduled tenure ends. By paying the entire outstanding loan amount, along with any applicable pre-closure charges, borrowers can complete the pre-closure process. The specific charges for pre-closure may vary among different lenders.

The Home Loan tenure is decided by the lender based on your monthly income, age, and other eligibility factors. A Home Loan tenure of 20 years may be convenient for you if your monthly income allows you to make the monthly repayments comfortably for this tenure.

A long repayment tenure may be beneficial if you lower monthly EMIs. This way you would be able to repay your Home Loan conveniently without compromising with other financial expenses.

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