You might think that there is something wrong here. How come we are telling you that lower EMIs are something to be careful of? Isn’t it?

But in general, you need to be careful when you borrow. And more so when your EMIs are lower. It’s possible that you are missing out something important.

So what is it that is so important?

Suppose you purchase a house that costs a total of Rs 40 lacs. Of this, the lender will only give you loan for 80% of the cost and rest has to be provided by you as downpayment. So the loan you will get is about Rs 32 lacs.

Now the interest rate being charged is 9%.

Since you prefer low EMIs, your lender has told you that you can opt for a very long tenure loan and it will reduce the EMI. So you have decided to go in for 25-year tenure.

So for 25-year tenor, your home loan EMI is Rs 26,854.

But let’s see what you EMI would have been, if you had taken a loan for shorter tenure. Calculations show that EMIs will be as follows:

• EMI for 20 years – Rs 28,791
• EMI for 15 years – Rs 32,457

That was about EMIs. But what about the total home loan interest rates that you have to pay over the loan tenure?

The answer is given below and its shocking:

• Total Interest Paid for 25 years – Rs 48 lacs
• Total Interest Paid for 20 years – Rs 37 lacs
• Total Interest Paid for 15 years – Rs 26 lacs