When it comes to buying a home, you are bound to be fraught with worries. From working out the financials through to deciding upon the house that meets all your needs. The problem escalates even more if the house you decide upon is expensive and beyond your initial budget. This is by far one of the most common problem amongst home buyers.
To solve this problem, we have home loans. However, even deciding upon the right bank, the right amount and the right home Loan Tenure is an uphill task. In this post, we will discuss how to decide the right home loan tenure so you neither feel burdened nor you end up paying more interest. We will take two hypothetical cases, that will help you to decide the right tenure for you:
1) Mr. Morajkar, 36 years old, is a government employee with savings of 8 lacs in his account. He wants to buy a 1bhk apartment that costs around 34lacs. So he uses the savings for down payment and draws a loan of 28 lacs. His salary is 50,000 per month, of which he needs 10,000 for his monthly expenses. So he can choose a tenure of 20 years and pay 25-30k as EMI. He can even select a higher tenure to ensure the home loan doesn’t overburden him.
2) Sunil is the CEO of an IT company with a monthly package of 2lacs and great prospects in future. He is 28 years old. The home he has chosen would cost him 80lacs and he pledges 30% as down payment, which comes 24lacs. The rest, 56lacs, is the loan amount. So he can easily choose a tenure of 10 years and pay an EMI of 1.2 to 1.5 lacs. Since he is the CEO of a successfully growing company, he might feel the crunch in the first few years but would easily repay it with a rise in income.
If you would have noticed, there are 3 factors that determine the home loan tenure:
1) Your age
If your age is more than 40 or 50, it would be difficult for you to get a home loan with a tenure of beyond 15 years. Younger people can easily increase the tenure to up to 30 years.
2) Prospective income
If you are in a steady job with fixed percentage increment, you can choose shorter tenure. Business people with high prospects of growth percentage can take a risk and choose shorter tenure.
3) EMI that you can afford
Your monthly income determines the savings and the investment you make. The higher your savings from total income, the lesser will be the tenure.
So keeping these points in mind, choose your home loan tenure wisely. In case you need any help contact us
