How long can be a loan tenure?
Let’s first throw a light on what is home loan tenure. A home loan tenure is the time frame you will have to repay your home loan. Home loan repayment tenures can be as high as 30 years. The maximum home loan repayment tenure one can avail, however, will depend on their retirement age.
What is the Ideal Home Loan Tenure?
The ideal tenure for home loan repayment depends upon multiple factors such as the principal amount, rate of interest, and the monthly income of the borrower. Usually, the minimum tenure for a home loan is 2 years, while the maximum tenure can go up to as much as 30 years.
There is no ideal home loan tenure that fits all home loan cases because requirements vary from borrower to borrower. Hence, it is advisable for all borrowers to plan for the future and calculate a repayment period that takes notice of various factors. 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 for 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, and 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.
LONG TERM TENURE vs SHORT TERM TENURE
Many borrowers face the dilemma of which is better to choose, A long-term tenure or A short-term tenure. 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 a repayment tenor that is shorter than 5 years, exacting bigger EMIs through its duration. However, such tenors could also rank higher than the former, in terms of interest savings.
The bottom line:- Whatever home loan tenure you choose, you should choose the one that reflects your personal and financial ambitions.
