pnb housing
March 16th, 2022

What is the Repayment Tenure for Home Loan?

What is the Repayment Tenure for Home Loan?

It can be challenging for many people to buy their dream home without adequate financial resources. A home loan is the best option in such cases because it gives people the freedom to own a home without paying for it upfront in one go. As per the agreed terms of the loan, one can pay off the entire loan amount along with the interest over a specified period.

This is what we call the repayment tenure for a home loan. Often lasting as long as 30 years, home loan tenures offer you the option to settle for a duration that will not hurt your finances. But many applicants have questions regarding home loan repayment tenure – from what it is exactly to how to choose the ideal length. In this blog, we hope to answer them all.

Home Loan Tenure Meaning and The Ideal Tenure 

If you are looking for home loan tenure meaning, then here it is: It is the total duration of time over which you spread your home loan EMI payments to pay off the entire loan amount. It can be over 30 years. The maximum home loan tenure is usually decided based on an applicant’s retirement age but there are other factors at play as well.

A home loan tenure is also known as home loan repayment tenure, meaning that it is a specified length of time during which you must pay off your entire home loan along with the interest. Now, a home loan is usually either long-term or short-term. Let’s learn more.

Long-Term Home Loan Tenure

  • Most long-term loans last more than five years. The home loan maximum tenure can go up to 30 years.
  • Since long-term loans last for a significant duration,. Longer tenure would also help in improving loan eligibility.
  • Given the loan tenure, the EMIs will be less. Hence, long-term home loan tenures are more affordable in the long run.
  • However, the interest component of the home loan for a longer tenure is much higher.

Short-Term Housing Loan Tenure

  • A short-term housing loan tenure is defined as any home loan term that is equal to or less than five years. The home loan minimum tenure is usually pegged at 2 years.
  • The advantage of such a loan is that you will get out of debt quickly and get the property in your registered name in less time.
  • Because the home loan tenure is shorter, banks charge higher interest rates on loans to make up for the shorter loan tenure.
  • Because short-term loans are spread out over a shorter time, the EMIs are usually bigger. However, the total interest amount on a loan is lesser than a long-term home loan.

Short-Term VS Long-Term Loans

Choosing between a long or short-term home loan tenure comes down to your needs, financial abilities, and eligibility.

If you want to pay less EMI amount each month and don’t care about how much money you’ll pay in loan interest, you can choose the long-term loan option. Naturally, longer home loans are usually provided to younger applicants.

On the other hand, short-term loans are better if you want a quick loan repayment and don’t care about high-interest rates. If you are an older applicant, then your home loan tenure is usually short and terminates by the time you retire.

To calculate how the housing loan tenure impacts your EMI and over interest component, then you can utilise the home loan EMI calculator tool on our website.

Choosing the Best Home Loan Tenure

There are many factors to think about before you decide on housing loan tenure. They are:

  1.  Loan amount – To improve your home loan eligibility in the event of a big home loan amount, it is always a good idea to go for a longer home loan tenure. This is because longer home loans reduce your EMI, making the lender more confident in your ability to repay the loan.
  2. EMI – How much EMI you can afford in the long run factors heavily into your tenure decision. If you are already paying other EMIs every month, then you cannot take up a larger home loan EMI. Remember, though, that while a long-term loan has lesser EMI, you will be paying more interest.
  3. Age – If you are young with a sustainable, healthy income, then you have the freedom to choose between long and short-term loans as per your financial health.

Conclusion

Hence, by optimising your home loan tenure, you can keep the EMIs under control while also bringing down your overall interest outlay. So, making the right decision is paramount!

If you feel overwhelmed, then don’t worry! At PNB Housing, our representatives are always there to answer all your home loan queries, including how to pick the ideal home loan tenure. Get in touch today!

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