There are many lenders like Tata Capital home loan or Citibank home loan that provide long repayment tenures to their applicants so that they can simply realize their crucial dream of turning into a homeowner into reality while repaying their EMIs on a home loan with ease. The repayment tenure of most lenders like Citibank home loan and Tata Capital Home Loan can go up to 30 years. A longer repayment tenure substantially reduces your EMI. Unfortunately, it increases your whole interest outgo and the home loan cost. Note that there are zero workarounds on this. Applicants who can choose shorter repayment tenure with a lower interest rate have to pay higher EMI.

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Such kinds of challenges of opting for higher EMI for a shorter tenure holds the chances of late payment or default on witnessing financial emergencies. This can not just lower your credit score but also make you lose out on your home. A lower credit score negatively impacts your power to borrow in the future. Thus, choosing the correct home loan tenure is important. Thankfully, you can factor in certain crucial pointers to make an informed choice that is tailor-made as per your preference and need.

Monthly income

If you want to opt for a home loan, remember that your home loan EMI would account for a generous share of your monthly income. Thus, it plays an important factor in determining your repayment loan tenure. As per your income earned per month, a shorter tenure would equate to a higher share of your income being used towards home loan EMI. A higher repayment tenure would not just ease off your repayment burden but also incur high-interest outgo. Use & benefit of a home loan EMI calculator is to know the optimal repayment tenure is a prudent way. Doing so would help you figure out an EMI, which would not burden you as well as your other mandatory monthly expenses. As per your repayment capacity, opt for the shortest repayment tenure to lower your overall interest outgo.

Property

Every home loan applicant harbours the aspiration of purchasing a dream home on their own. Unfortunately, there are times that the cost of the home can surpass your budget, creating a huge strain on your finances. This burden leads to higher EMI in short tenure or higher interest rate in long tenure.

For keeping a thorough check on your home loan EMIs and rate of interest, you must select the property appropriately. Ideally, a residential place that fits your budget with emergencies for unforeseen future expenses is also recommended. Also, it is beneficial to choose the property whose value may appreciate in upcoming years so that the property stays a smart investment. Selecting the correct property to buy can be doubly beneficial. It also assists you to have good control over your loan EMIs and ensures that the rate of interest does not go out of hand.

Applicant’s age

Applicant’s age is one of the home loan eligibility factors, which all lenders consider seriously. A young applicant can work for a longer time, earn a higher amount with potentially great career prospects as compared to old age or retired individuals.

As an outcome, young applicants hold power to bargain when asking for a higher repayment tenure. In contrast, applicants in their mid-ages or later ages are expected to repay the loan proceeds in shorter tenure, which results in higher EMIs.

Down payment amount

Lenders never ever offer the complete property cost which you want to purchase. As per RBI, they typically can fund up to 75 to 90 percent of the property’s value. The remainder is supposed to be repaid by the applicant in the form of a down payment amount. Also, applicants may have to repay additional expenses like legal fees and registration fees, which is generally up to 6 percent of the value of the property.

Lenders usually abide by the policy to determine how much of the property cost they might finance. This is called the LTV ratio or loan to value ratio. Suppose a scenario where the property’s cost you intend to purchase is 50 Lakh Home Loan, and the lender can fund up to 80 percent of the property’s value, which comes up to Rs 40 lakh. This infers that the remainder, i.e., Rs 10 lakh, must be funded from your own pocket. However, if you have a higher capacity to pay, you can pay, say Rs 15 lakh instead of Rs 10 lakh. Doing so will lower your EMI outgo. Also, it can lower your repayment loan tenure, which reduces your overall interest outgo.

Rate of interest

The next crucial factor to consider when trying to decide upon the loan repayment tenure is your interest rate. The rate of interest is applied on an annual basis. It means for higher repayment tenure, applicants may end up repaying a higher amount of the overall interest. By using home loan EMI calculator in India, you simply can compute your tenure against the interest rate and the EMI that you prefer repaying.

Retirement

In case you are planning to opt up a home loan, you must consider your age of retirement. Post-retirement, you will not be able to enjoy your monthly income source. To make sure you are not burdened much due to a home loan in your retirement days, your tenure for a home loan ideally must end between 10-14 years, much before you enter your retirement age. Thus, if you plan on retiring at 60 years of age, you must aim to repay your home loan by around 50.

Both your short- and long-term home loans come with their own set of benefits and drawbacks. Selecting a repayment loan tenure that ideally matches your preferences and requirements will allow you to make regular repayment in a hassle-free manner. Thus, what are you waiting for? If you are one of those individuals in India who are looking to avail of a home loan, then check out Tata Capital home loan, Citibank home loan and other top-notch home loan lenders to avail the best home loan deal as per your suitability and preference.