One the biggest decisions in life is to buy a new home. Almost everyone who wants to buy a new home goes in for a home Loan. But most of them get confused as in to which is better, a short-term home loan or a long term home loan?
We think that getting a short-term or a long term home loan depends from person to person. But in case you are confused here are a few factors which will help you decide.
Income – Having a steady and sufficient income is a major factor when it comes to deciding whether you want a short term loan or a long term loan. If you are opting for a long term loan it means that you are willing to pay a higher amount of interest, in case your income is good then then you should opt for a short-term loan. In this case you might have to pay a higher EMI but the total interest amount will be less.
Age – You might not realise it, but age makes a huge factor on which your ability to take a short term or a long term loan depends upon. If you have started working in your 20s then you can always go in for a long term loan, but if you are in your forties then, you will have to consider your options.
Rate of Interest – Another important factor which determines that which loan you should take is the Rate of interest. You can either go for fixed rates or floating rates. If you want take the risk, you can go for floating rate, but if you want to be cautious, then you can go for fixed rates. One advantage which floating rate of interest has that the rates depends on the market, so there is a possibility that you might have to pay significantly lower rate of interest but it can go the other way round as well.