Before taking a housing loan, the home loan tenure must be decided. A home loan duration is the duration to repay the loan. Usually, the housing loan duration will start from 5 years and it may extend till 25 years. Normally, many people prefer a longer tenure. This is because, if they take a longer tenure, then their monthly EMI will be less.
The EMI totally depends upon the housing loan tenure. The EMI is higher if the loan duration is short. In this case, the interest paid is also less when compared to a longer loan duration. One of the factor that decides your loan tenure must be the purpose for which the loan is taken. If a person is buying a property as an investment, he normally goes for a shorter tenure. This will help him avoid the exit charges that is to be paid in case of early termination of the loan.
Deciding ideal loan tenure:
There are a number of factors that determine the loan duration. One of the most important factor among them is your disposable income. You have to repay your loan from this part of your income. So, if your net disposable income is less, it is better to go in for a longer tenure loan. In this case, the EMI will be reduced. But, you have to pay the interest for an extended period of time.
When compared to a long tenure loan, a short tenure loan comes with a lower rate of interest. And s0, it is always a best option to go for a shorter duration loan, if you have enough resources to repay the loan amount. This will help you get lower interest rates.
The amount you are going to borrow must also determine the loan tenure. If you are borrowing a huge amount, it is better to go in for a longer tenure loan.
One more factor to be considered is your future income. If you are expecting an increase or decrease in your net income, you have to decide the loan tenure accordingly. If you are going to retire in 10 years, your maximum loan tenure must be 10 years. Do not stretch your loan tenure beyond your retirement age. In the same way, if you are 35 years old, you can have a longer tenure loan, stretching up to 25 years. This is because your income will rise gradually. Your income will be less in the initial years of employment. It increases over years. So, you can go for a longer duration loan and you can reduce your present burden.
The EMI totally depends upon the housing loan tenure. The EMI is higher if the loan duration is short. In this case, the interest paid is also less when compared to a longer loan duration. One of the factor that decides your loan tenure must be the purpose for which the loan is taken. If a person is buying a property as an investment, he normally goes for a shorter tenure. This will help him avoid the exit charges that is to be paid in case of early termination of the loan.
Deciding ideal loan tenure:
There are a number of factors that determine the loan duration. One of the most important factor among them is your disposable income. You have to repay your loan from this part of your income. So, if your net disposable income is less, it is better to go in for a longer tenure loan. In this case, the EMI will be reduced. But, you have to pay the interest for an extended period of time.
When compared to a long tenure loan, a short tenure loan comes with a lower rate of interest. And s0, it is always a best option to go for a shorter duration loan, if you have enough resources to repay the loan amount. This will help you get lower interest rates.
The amount you are going to borrow must also determine the loan tenure. If you are borrowing a huge amount, it is better to go in for a longer tenure loan.
One more factor to be considered is your future income. If you are expecting an increase or decrease in your net income, you have to decide the loan tenure accordingly. If you are going to retire in 10 years, your maximum loan tenure must be 10 years. Do not stretch your loan tenure beyond your retirement age. In the same way, if you are 35 years old, you can have a longer tenure loan, stretching up to 25 years. This is because your income will rise gradually. Your income will be less in the initial years of employment. It increases over years. So, you can go for a longer duration loan and you can reduce your present burden.
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