Do not make this mistake while choosing home loan tenure, the difference of even a few years can cause big loss.

Home Loan Tenure Tips: Buying one’s own house is still a dream for many people. Due to rising prices, people take home loans from banks to fulfill their dreams. However, it is very important to keep one thing in mind while taking a home loan. That is to choose the right period i.e. tenure.

Often people are confused about whether to keep the EMI low or try to finish the loan quickly. In fact, this decision of yours can make a lot of difference in the interest amount. Therefore, it is considered wise to choose the tenure by maintaining the right balance. Let us know about this.

Tenure makes a big difference

• If a person takes a home loan of Rs 2 crore at an interest rate of around 8.5 percent. Also, if the tenure of this loan is fixed for 20 years, then the interest comes to about Rs 2.15 crore. The total payment figure reaches approximately Rs 4.15 crore.
• If the same loan is taken for 25 years, the interest amount increases to about Rs 2.86 crore. The total payment reaches to approximately Rs 4.86 crore. This means that in just a gap of 5 years, a big difference in interest is clearly visible.

Benefits are available in short tenure

• If the same loan is taken for 10 years, the total interest comes down to around Rs 98 lakh. The total payment figure also comes down to around Rs 2.98 crore.
• This means that just by changing the tenure there is a big difference in the interest. You have to pay a lot more money in the long run.
• The difference in interest alone between 10 years and 25 years tenure is around Rs 1.9 crore. Which clearly shows that a long loan seems comfortable but the interest amount on it is very high.

Experts’ opinion

According to a report published in News 18, financial experts often suggest that while taking a home loan, it is better to initially choose a longer tenure like 20 to 25 years. Due to which the EMI burden does not seem too heavy. However, in future, when your income starts increasing, you can reduce the loan tenure by making prepayment from time to time. If you have some extra money, you can also use it to repay the loan. Due to which you will get relief on total interest.

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