Here’s how to select an ideal repayment tenure for your home loan for a hassle-free repayment of home loan. Learn regarding the main factors that impact the choice of home loan repayment tenure depending on your preference.
Purchasing a home through home loan in Dehradun or opting for take over loans is the costliest and long-term investments done by an individual in a lifetime. Long gone are those days when individuals used to save funds through their career years and purchase a home. This is one of those things that is not financially possible in present days’ time as the costs of the properties are enhancing day by day. Note that the potential buyers require financial help to purchase one for themselves. With a home loan kind of financial help that lenders like HFCs (housing finance companies) and banks offer to assist potential buyers buy, construct, rebuild or renovate their home with ease. These financial providers or institutions are even addressed as lenders.
Generally, home loans are bigger and longer-term loans than the usual personal loan or auto loan that lenders offer after detailed evaluation of your eligibility as an applicant. Moreover, the eligibility of specific property for which loan is applied is even factored in. Continue reading to know about the home loan repayment tenure you must place an application for, in addition to the details linked with application procedure, repayment schedule and required documents.
What’s a home loan repayment tenure?
The overall home loan repayment period is known as tenure of the home loan. The highest repayment tenure of a home loan is based on distinct factors involving age, the time horizon left in retirement, monthly expenses, monthly income, etc. Banks and various other lenders provide a maximum home loan repayment equaling 30 years. However, they even require you as a borrower to timely repay your loan before you retire from your employment services.
You as a home loan applicant can select your repayment schedule depending on your financial preferences. There are majorly 2 kinds of home loan repayment tenures – short term home loan repayment tenure and long-term home loan repayment tenure. Let’s understand which one is a best match for you as an applicant.
Short term home loan repayment tenure or the long-term home loan repayment tenure – which one you must opt for?
Your choice to opt for a home loan repayment tenure is based on your monthly as well as your annual debt obligations. If you hold a bigger income and lesser debt obligation, then you may easily be able to make payment of a higher portion of your income in the form of a home loan instalment. In this scenario, selecting a short-term loan repayment tenure would be a good decision.
In contrast, if you hold a considerable number of debts, which you must pay per month, you must then divide your home loan proceeds into smaller equal portions and instalments and then select a long term tenure for a hassle free and stress free repayment. There are a few other crucial parameters too that you must consider when selecting a home loan repayment tenure. Continue reading to understand.
What are the parameters impacting the home loan repayment tenure?
Read on to know below the major parameters that impact the tenure of home loan for you as a borrower.
∙ Your age – Age is a very important parameter that impacts a home loan repayment tenure. Many lenders offer a repayment tenure of as high as 30 years or until your retirement age. For many employees, the retirement age usually ranges between 58 and 65 years. Read on to know the age of the employees employed in distinct work streams.
|Employee type||Retirement age|
|State government employees||Between 56 and 60 years of age|
|Private sector employees||58 years|
|Central government employees||60 years|
In the scenario if you are a self-employed loan seeker, the highest repayment tenure may be 30 years for the age ranging between 60 and 65 years of age. The repayment tenure duration differs from one lender to another. An individual availing a home loan in the early years of employment can use the benefit of higher home loan repayment tenure, which indirectly converts to lower loan EMI amount or higher loan proceeds.
∙ Home loan amount – Home loan amount is the next parameter that impacts your home loan repayment tenure. Lenders create the repayment schedule depending on the sum of principal loan proceeds and applicable interest constituent depending on the interest rate offered on home loan. You as an applicant have the flexibility to choose the tenure based on your repayment potential and cash inflows.
∙ Existing loans and debts – As previously mentioned, you must note your existing debts and loans before selecting the loan repayment tenure for loan amount repayment. You may consider prepaying a few of the debts by consolidating them into one single loan to enhance your borrowing potential. You may even select a higher home loan repayment tenure and lower your home loan instalment constituent. In this way, you can continue managing your current debts while making the most out of the available home loan advantages.
∙ Loan repayment potential – Your home loan repayment potential even impacts your home loan tenure choice in a distinct manner. For instance, you can select the home loan EMI proceeds depending on your budget needs. If you select to pay a higher loan EMI every month, the loan tenure you must choose is short. However, if you select to repay the overall home loan in extremely small instalments, then you must go for the longest tenure available. However, note that in this process, the overall interest constituent charged on your home loan would even be high.
What is the prudent home loan repayment tenure?
While availing a home loan, there’s zero best or ideal repayment tenure as such. Selecting the repayment tenure is entirely based on your preference, current financial status and your other important financial goals. Few might select to pay a higher loan EMI and close the loan at the earliest. This allows for higher savings in the mid-life. Maximum chunk of the applicants of home loan choose to pay a home loan EMI as low as possible so as to get a higher cash flow to meet the other expenditures.