Having a Home is one the most important need of each one of us, it can surely be rented, but for a lot of us having our Own Home is important. We put our lives savings in it and we need to be very agile and knowledgeable in case we are taking a Home Loan and we need to know our EMI Per Month, Type of Loan, Principle and Interest Portion. Recently Bajaj Finance has offered an option to increase the tenure of the Home Loans till 40 Years.
Let us assume that you are a 40 year old salaried employee, and for you buying a home is important and buying the Home with a home loan is a significant financial decision. One crucial aspect to consider is the loan tenure, which determines the duration of your repayment journey. Selecting the right tenure can have a significant impact on your monthly finances, interest payments, and overall financial goals. In this guide, we'll explore key factors to help you make an informed decision on the ideal home loan tenure.
EMI Chart per Lakh for Different Loan Tenures, this will help in understanding the Monthly EMI and Principle Amount.
Here is an approximate EMI chart per lakh for different loan tenures at an interest rate of 8.5%:
Loan Tenure | EMI per Lakh (in INR) | Principal Component per Lakh (in INR) | Interest Component per Lakh (in INR)
10 years | Rs. 1,215.71 | Rs. 839.36 | Rs. 376.35
15 years | Rs.897.25 | Rs. 652.83 | Rs. 244.42
20 years | Rs.766.88 | Rs. 523.25 | Rs. 243.63
25 years | Rs. 698.94 | Rs. 466.34 | Rs. 232.60
30 years | Rs. 656.88 | Rs. 422.78 | Rs.234.10
35 years | Rs. 629.55 | Rs. 389.07 | Rs. 240.48
40 years | Rs. 610.68 | Rs. 361.26 | Rs. 249.42
Considerations for Choosing the Right Tenure:
Monthly EMI: Evaluate your monthly cash flow and choose a tenure that allows you to comfortably manage your Equated Monthly Installments (EMIs). Longer tenures result in lower EMIs, while shorter tenures lead to higher EMI amounts. Assess your budget and financial stability to determine the EMI amount that aligns with your financial goals.
Interest Burden: It's crucial to consider the interest burden associated with different loan tenures. Longer tenures generally result in higher overall interest payments over the loan term. On the other hand, shorter tenures result in lower interest payments. Calculate and compare the total interest amount you would pay over various tenures to assess which option suits your financial objectives.
Financial Stability: Assess your financial stability and job security. If you have a stable income and anticipate no major changes in the future, opting for a shorter tenure can help you clear your debt faster. However, if your income is uncertain or you expect other financial commitments, choosing a longer tenure with lower EMIs could provide more flexibility in managing your monthly finances.
Future Plans: Consider your future plans, such as retirement or other significant financial goals. If you have other investment opportunities or financial aspirations, selecting a shorter tenure can help you become debt-free sooner and focus on other objectives. However, if you have a longer working life ahead, you might consider a tenure that extends beyond your retirement age.
Age and Retirement: Factor in your age and expected retirement age when deciding on the loan tenure. If you plan to retire within the loan tenure, opting for a shorter tenure would be beneficial, as it allows you to repay the loan before retirement. However, if you have a longer working life ahead, you might opt for a tenure that extends beyond your retirement age while considering the implications of interest payments during your retirement years.
The information provided in this article is for informational purposes only and should not be considered as financial advice. Readers are advised to consult with a financial advisor or mortgage professional for personalized guidance based on their specific circumstances.