Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply
Quick Links for loans
Quick Links for Insurance
Investment
Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Loan for Home > Short or Long Tenure? Which is Better for Home Loans?

Loan for Home

Short or Long Tenure? Which is Better for Home Loans?

Short or Long Tenure? Which is Better for Home Loans?

Home loans are generally considered to be long-term loans, whose repayment can span over a decade or two. Infact, the industry-wide average home loan tenure is 15 to 20 years.

Now it’s common knowledge that compared to other forms of loans, home loans are much cheaper (about 8-9%). Also the fact that tax incentives are given for principal repayment as well as interest payments, ensures that the effective rate of loan is even lower. This is the reason most people prefer to let their home loans continue according to normal schedule even if they have additional funds that can be used for extra repayments.

But even then, the question remains same. As a borrower, what is in your best interest? A home loan with short or long tenure?

Let’s try to answer this question.

Additional Read: Top Factors Affecting Your Home Loan Tenure Decision

Mathematically speaking, home loan tenure has a direct impact on your EMIs as well as on the total interest you pay.

Most people prefer to opt for lower EMIs as it is less of a burden on monthly finances. To opt for lower EMI, one has to go for longer tenure loans. But this also means that the total interest being paid over the loan tenure will be higher.

For a Rs 40 lac home loan interest rate taken at 6.9%  :

EMI for 25 years - Rs 33,568 - (Total Interest Paid for 25 years - Rs 61 lacs)

EMI for 20 years - Rs 35,989 - (Total Interest Paid for 20 years - Rs 46 lacs)

EMI for 15 years - Rs 40,571 - (Total Interest Paid for 15 years - Rs 33 lacs)

As is evident from above, no doubt longer tenure means lower EMI. But it also means that the total interest paid will be much higher. Infact, the difference can run into several lacs.

Additional Read: Want to Own a Home? Check Out How to Apply for Home Loan

So what should you do now?

You definitely cannot pay a very high EMI in comparison with your monthly income. Lenders themselves don’t allow EMIs to be more than 40% of your total income.

So chose an EMI that you can comfortably repay month after month. But if possible and if your finances permit, try to pay higher EMIs and opt for shorter tenure.

Apply Now
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Important Information

Investor Information

Visit us on:,Visit us on: www.tatacapitalmoneyfy.com,www.tatacapitalmoneyfy.com

Our Private Equity Funds

Amalgamated Companies

Top Branches

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.