How To Choose Home Loan Tenure? Long-Term vs Short-Term

What is Home Loan Tenure?

The term “Tenure” of a loan refers to the length of time it will take to pay back in full. 

The maximum loan term is determined by a number of variables, such as age, the amount of time until retirement, monthly expenses, monthly income, etc. 

The maximum house loan term offered by bank institutions and other lenders is 30 years. 

Moreover, they also require borrowers to pay back the loan prior to their retirement from employment.

Loan applicants for homes have a choice of repayment schedules according to their financial needs. 

Long Term Home Loan Tenure & Short-Term Housing Loan Tenure are the two main forms of the home loan tenure.

Difference Between Short-term and Long-term Tenure For a Home Loan

Here is the difference between Short term home loan tenure and Long term home loan tenure.

What is a Home Loan Tenure Calculator?

You can use a Calculator for home loan tenure calculation to determine the length of time or the number of EMIs needed to repay your loan depending on the principal balance, the applicable interest rate, and the monthly payment you can afford. 

Additionally, you can use a home loan tenure calculator to determine the length of your loan’s remaining term if you intend to partially prepay an existing loan.

Components of Home Loan Tenure Calculation

Here are components of a home loan tenure are as follows:

Loan amount/principal amount: The sum that a bank and perhaps NBFC provide to a borrower is known as the principal loan amount. Each lender has a different range of lending amounts.

EMIs: Equated monthly instalments, or EMI for short, are the sum that a borrower is required to pay the lender each month during the agreed-upon loan term. You can calculate your monthly EMI on the EMI calculator.

Interest Rate: The cost of a loan is the interest that a lender charges a borrower for using their money. A proportion of the principle is used to represent the interest rate for each period.

Which Factors Influence Home Loan Tenure?

While applying for a home loan you are required to understand about few factors which influence home loan tenure. 

Age

One of the key variables in determining the length of a house loan is your age. 

Many banks provide terms of up to thirty years, or till the borrower reaches retirement age. In India, employees can retire at any age between 58 and 65. 

The information for individuals working in various streams is provided here.

Amount of Home Loan

The mortgage amount is one of the elements that impact the length of the loan. 

Banks calculate the payback schedule for mortgage loans based on the total principal loan amount and the interest amount applicable depending on the home interest rate offered. 

According to their monthly earnings & the amount of the house loan instalment, borrowers are free to choose the duration. 

For instance, you can save money on interest by selecting a lower home loan payback term if the total amount owed is greater than 3% of your annual income.

Existing Debts and Loans

As was already indicated, before selecting the house loan tenure for payment of their home loan amount, you must take into consideration your existing mortgages and debts. 

To boost your borrowing capacity, you can think about paying off some of your loans or consolidating them into a single loan. 

Alternatively, choose a long tenure for a loan and pay less in monthly instalments. 

In this manner, you can proceed to pay off your current bills while taking advantage of house loan advantages.

Capacity of Loan Repayment

The applicant’s ability to repay the mortgage has a variety of effects on the length of the loan. For instance, you can base your loan EMI on your monthly spending needs. 

The payback period will be brief if you decide to make greater monthly home loan payments. The repayment period would be longer if you decide to pay off your entire home loan in smaller instalments.

Also, you can read How to choose a Bank for Home Loan?

What is the Minimum Tenure for a Home Loan?

The minimum length of a home loan is two years. Such a loan has the advantage of allowing you to repay your debt quickly and get the house in your possession more quickly. 

In order to make up for the shorter loan period of mortgage loans, banks raise loan interest rates.

What is the Maximum Tenure for a Home loan?

The maximum term for a mortgage loan is 30 years. 

Longer tenure also would assist in enhancing loan eligibility because long-term mortgages last for a considerable amount of time. 

The EMIs would be lower given the length of the loan.

How To Decide Idea Home Loan Tenure?

It’s advised to purchase a home before the age of 28, as this enables for the 30-year loan tenure & higher Loan sum, and to fully benefit from cheaper EMI & higher home loan amount depending on tenure.

Even though a home loan’s term shortens when the borrower reaches the age of 28, it may be claimed that because of increased income at later ages, a greater loan amount can still be obtained.

You can also apply hustle free for a home loan with suitable tenure.

How To Reduce the Home Loan Tenure?

Your house loan tenure can be greatly shortened by increasing your EMI by 5% yearly.

In addition to making scheduled EMI payments toward your mortgage, you can shut the payment plan before the duration of the loan is over by partially prepaying the outstanding loan balance.

Can we close the Home Loan Before Tenure?

In order to reduce interest payments, a borrower may also pre-close a loan. 

A proportion of the interest can be avoided by paying off a mortgage before the period is over. Any interest he or she was required to pay after the preclosure will be immediately forgiven when the loan is closed.

Also, read the List Of Documents Required For A Home Loan In 2025

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