The Home Loan tenor refers to the duration within which the borrower agrees to repay the loan amount in full, including both the principal amount and the interest accrued atop it. Typically, Home Loans come with a lengthy repayment tenor,often stretching up to 30 years, allowing borrowers ample time to repay the loan amount.
However, when you take a Home Loan, especially for nearly 30 years, makes the repayment a significant commitment – making selecting the right Home Loan tenor imperative. On this page, we explore what the ideal Home Loan tenor should mean and what you should consider while calculating your repayment tenor – in a way that best compliments your financial goals and aspirations.
There is no one ideal tenor that fits all Home Loan cases. Every borrower’s needs, suitability, and capacity differ, and so, the ideal tenor varies from person to person. Borrowers are, hence, advised to plan for the future and calculate a repayment period that takes various factors into account. Some of these are:
- The Loan Amount: The Home Loan amount you seek has a considerable impact on the duration it may take to finally close the obligation. If you want a sizeable sanction, it may take you longer the principal amount and the interest component; especially if you would like to avoid steep EMIs.
- Repayment Capacity: While calculating your repayment tenor, you should also account for your monetary obligations and duties, as your repayment capacity may already be divided. In this case, choosing the right tenor will help you adjust your EMI amount in a way that suits your repayment capabilities.
- Retirement Age: Most lenders benchmark a certain age, after which, they hesitate to offer Home Loans. Older applicants may struggle in this aspect, as 62 is typically considered the maximum age, that too at the time of loan maturity itself. If you are a senior borrower, you may want to assess your desired Home Loan amount, keeping in mind the possibility of a limited repayment tenor.
However, older individuals can still improve their chances of getting better Home Loan terms if they include a co-applicant with a good credit score or a guarantor in their application.
Most borrowers are struggle with what type of Home Loan tenor to choose – long term, or short term. Here is a brief definition of both:
- Long Term Home Loan Repayment Tenor: Generally, a repayment tenor that exceeds 5 years and could stretch up to 30 years. Such tenors allow a more relaxed repayment schedule with smaller EMIs. On the flip side, borrowers who opt for these shell out more, in the form of Home Loan interest.  Such tenors allow a more relaxed repayment schedule with smaller EMIs. On the flip side, borrowers who opt for these shell out more, in the form of Home Loan interest.
- Short Term Home Loan Repayment Tenor: Usually the Home Loan minimum tenor in short term repayment goes down to 2 years while the maximum tenor does not exceed 5 years. To compensate for the smaller loan tenor, you may be charged a higher rate of interest. Effectively, your EMIs go up but your overall interest outgo remains much low.
Whichever loan term you select, you should sure that is reflects your personal and financial ambitions.
The Home Loan EMI Calculator is an apt tool for such dilemmas. Using this online tool is easy and free of cost – allowing you the foresight into planning your Home Loan repayment realistically. Here is how to best use the tool to your advantage:
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Use the slider to accurately select your desired Home Loan amount
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Use the next slider to indicate your preferred Home Loan repayment tenor
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Use the third slider to select the current Home Loan interest rate
The calculator then projects your possible Home Loan EMI calculation, your total Home Loan payable, along with the principle and interest break-up. This forecast helps you assess the EMI amount, calculated considering your preferred repayment tenor to see if it fits your budget or not. You can use the tool as many times as you would like, till you reach a repayment tenor that satisfies all your Home Loan needs.
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