Financial institutions today facilitate the purchase of your dream house through home loans. However, availing a loan to buy your house means paying EMIs throughout the repayment tenure, which is usually long. It may sometimes turn exhausting. Hence, you should choose the loan tenure cautiously. Tools like Home Loan tenure calculator make the assessment easy and convenient.
Also, loan tenure depends on different factors. Know them before you approach a lending institution to make an informed decision.
Factors Affecting Housing Loan Tenures:
a. Age of The Applicant
The first and foremost factor that impacts housing loan tenure is the applicant’s age. If you take a loan early in your career, say before you reach your 30s, you can benefit from the longest tenure.
It is because the longer time you have in hand, the more conveniently you can repay home loan EMIs over your remaining career. It will ensure you will be debt-free before retirement. Also, it is wise to repay the amount before retirement as you will have a regular source of income to meet the monthly obligations.
Risking your financial stability after retirement with EMI liability is never advisable. So, the earlier you apply for a housing loan, the more feasible long repayment tenure proves to be.
b. Applicant’s Income
Income is another essential determinant that has a direct bearing on the repayment tenure as well as your financial capacity. When using the home loan tenure calculator, you will find that if you choose a shorter tenure as against a longer one, it increases your EMI amount.
These monthly outflows are financial liabilities and restrict other expenditures. Furthermore, they are subject to change with the variation in interest rates. Lately, the financial market has seen a rise in interest rates. Even a slight change in these rates can increase the EMI amounts significantly. If the rates rise after you avail a housing loan with short tenure, it may land you in a financial mess. Assess your financial capacity and select the tenure with suitable EMI accordingly.
Additionally, you may also look out for lenders who offer the best home loan interest rates. With these rates, you can go for a considerably longer tenure as the EMIs remain affordable. Such rates also prove convenient when you opt to increase your existing housing loan amount and fulfill your urgent financial needs with a top-up loan.
c. The Purpose of Availing This Loan
When you calculate the loan tenure and the respective EMI with a home loan tenure calculator, observe that the EMI amount consists of both principal and interest. It is essential to be informed here that the interest payable is affected by both the rate of interest and the tenure you opt for.
A home loan’s tenure and its interest are directly related. Hence, the longer tenure you choose, the more interest you will have to pay. Now, depending on your repayment capabilities, it is crucial to select the tenure wisely. You may also take into consideration the purpose of purchasing the property.
If you buy a house for residential purposes, a long tenure will be suitable. However, if you purchase it with an aim to resale, an extended tenure will affect your finances negatively as you will have to pay the interest long after purchasing it. The interest payments negate the profit earned from the sale and leave you with limited funds in-hand.
So, factor in all of the above to arrive at a suitable repayment tenure. Check your home loan eligibility and apply it successfully. You may use some tips to purchase your home smoothly.