Forum Thread: 3 Factors That Affect Home Loan Tenure

Buying own home is a dream come true for many people of us. However, due to the high price of the property, only a few can afford to pay such a whopping amount. In such situations, buyers turn to banks for home loans. But, taking a housing loan is not an easy task as paying monthly Home Loan EMIs can be an exhausting process for you. It is for this reason that you should give some serious thoughts to the loan tenure that you want to take. However, the tenure of a home loan depends on various factors, which you should be aware of before you approach the lender for your loan.

Take a look at the factors that determine your home loan tenure:

Age: The early you apply for a home loan, the more is the possibility of getting a longer tenure loan. if your age is near 50 then it would be very difficult to apply for a home loan. Because most banks prefer borrower who is not so close to retirement as retirement can affect your loan repaying capability. It is wise and safe to pay your EMIs before the retirement. Generally, the minimum age to apply for a home loan is 18 years and repayments have to be made before the age of 70 The early you apply for a home loan, the more is the possibility of getting the loan for a longer tenure.

For example: Suppose you are nearing 40s and you can avail a home loan of Rs. 20,00,000 with a rate of interest of 8.65% for 20 years. Assuming interest rate either remains the same or reduces below 12%, you will have to pay off the loan before the retirement age of 60. However, if the interest rate increases and you are not able to pay the increased EMIs, then you will have to opt for an extension of your loan tenure. In such a situation, the loan tenure may go beyond your retirement period and you may not be able to pay the EMI without a regular income.

Income: Needless to say, having a stable income is a necessity if you want to get your loan approved. Your income also determines the ability to pay EMIs on your home loan. If you take a home loan for a shorter time period; your EMIs will high. And, if you take a home loan for a longer tenure, your EMIs will be low. However, before deciding upon the monthly installments, it's better to assess your repayment capacity. Your EMI will be a huge financial burden and hence, it is a big risk. Moreover, if the interest rates rise in the future then it will further raise your EMIs and can lead you to a debt trap. So, it's wise to plan in advance before choosing the home loan tenure.Your income determines the ability to pay EMIs on your home loan. If you take a home loan for a shorter time period; your EMIs will high. And, if you take a home loan for a longer tenure, your EMIs will be low. However, before deciding upon the monthly installments, it's better to assess your repayment capacity.

For example: Suppose you take a home loan of Rs. 25,00,000 at the interest rate of 12% for 20 years then your EMI will be Rs. 27,527. But if you take the same amount of loan for 10 years then your EMI will be Rs. 35,868. Hence, it is clear that you can opt for the short term home loan only if you can afford to pay the high EMI.

Age of the property: The age of the property also plays a vital role in determining your home loan tenure. As the house is pledged as a security for the home loan, The residual life of the property is calculated by a civil engineer or an architect.In case the loan tenure is longer than the residual life of the property, the lender carries the risk of losing their security, in case the property collapses or destroyed.The age of the property also plays a vital role in determining your home loan tenure. The lender will not provide a home loan for a tenure that is longer than the residual life of the property that you have to buy. So, before applying for a housing loan, keep these important factors in mind to determine your eligibility and home loan tenure. Choose your tenure wisely so that you can repay your dues on time.

So, before applying for a Home loan, keep these important factors in mind to determine your eligibility and home loan tenure. Choose your tenure wisely so that you can repay your dues on time.

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