Compare Best Home Loan Tenure: 15 Vs 30 Years
The loan tenure will decide the total interest that the borrower will shell out for the EMI. That makes loan tenure the most important variable for taking a home loan. That being said, owning a home is everybody’s dream. Financing a home with a home loan is easier these days if you can raise the required down payment. Also, due to the pandemic, home loan interest rates are relatively lower, which has encouraged people to go for home loans.
Eligibility and other factors
That said, the loan amount that will be approved once you apply for a home loan will not be more than 50 percent of your take-home salary. In addition, if “you” are a couple, the spouse’s salary will also be taken into account. It will enhance credibility and give an edge to your eligibility for the loan.
The interest rate on loans will depend on several factors, from gender and profession to income and credit score. The tenure of the loan is crucial. It could vary from 15-year to 30-year tenures. The EMI calculator for home loan will show that longer the loan tenure, the lower will be the EMI.
Home Loan EMI
To reiterate, EMI will depend on loan tenure. When you apply for a home loan, you will learn that the shorter the tenure, the higher the EMI. The lower the EMI, the easier it will be to pay the loan back. Most borrowers prefer the EMI to be almost at par with the rent they pay.
The home loan EMI calculator will tell you that a higher EMI will enable the borrower to repay the loan in a shorter time frame. People who can afford a higher EMI can opt for a shorter loan tenure. A loan paid back in full takes the weight off your shoulder.
Different interests rates
The total interest burden will depend on loan tenure. The longer the tenure, the higher the interest burden! Use a home loan EMI calculator to determine the interest burden for different loan amounts and loan tenures — like the interest burden on a Rs 35-lakh loan over 15 years and 30 years. So, when you apply for a home loan, make sure how much of an impact the loan and the EMI will have on your family’s lifestyle/budget. Go for a home loan that disrupts your family’s lifestyle the least.
Final thoughts
The EMI does not change over the loan tenure. It remains constant right up to the end of the loan tenure. Servicing it may get easier if income keeps growing over the tenure. Therefore, choosing the loan tenure is perhaps the most critical part of the deal when applying for a home loan. The goal should be to pay off the home loan ASAP and keep the interest component as low as possible.
A longer loan tenure spells lower EMI but a higher interest cost. Repaying the loan in regular lump sum payments at fixed intervals will help get out of the loan quicker. The home loan EMI calculator is the best guide to the pursuit of happiness.
