Home Loan Tenure

02 Jan 2023

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Home Loan Tenure - Introduction

Home loans are a blessing for every home buyer. With the ease of repayment, a home loan fulfils the home buyer’s commitment to own a house. Even if you have an average income, you can dream of owning a home with the maximum tenure for a home loan, the duration at which the borrower repays the full loan amount, the principal sum and the accrued interest. Some might find the idea of loan and repayment discouraging, considering it to be a lifelong burden, but with a bit of planning the gains are much higher and you can repay home loans faster than you had planned. In a few years, you can see your world coming to shape little by little. As Earl Nightingale rightly remarked, all you need is the plan, the road map, and the courage to press on to your destination, if all three are in place, dreams happen. Home loans allow you to invest in a property with certain minimum margin. You are given the option to easily return the loan amount within a specific period. You can discuss the repayment tenure with your lender and choose the maximum tenure for a home loan or minimum tenure for a home loan, subject to your capability. Both repayment tenures have their advantages and disadvantages. We will help you understand how each stand against the other and when and why should borrowers choose the respective tenure options.

The maximum tenure for home loan repayment

When we talk about the maximum tenure for a home loan, it refers to the loan tenure or the duration at which you and the lender decide on the loan repayment. The loan is repaid through equated monthly instalments (EMI) and can spread to a maximum tenure of 30 years. This is only applicable if you are applying for the loan at a young age and the loan is cleared ahead of your retirement age. These are long-term repayments that help borrowers manage their funds in such a way that they can own their homes without upsetting the monthly expenses. People choosing long-term home loans meet the increased loan criteria eligibility of the lenders. The greatest benefit for the borrower is that the monthly EMIs are manageable and affordable. Of course, you find yourself paying more in maximum tenure for a home loan as compared to minimum tenure for home loan repayment. So, determining your convenience and capability, you must choose the most favourable option for loan repayment.

Minimum tenure for a home loan

The minimum tenure for a home loan is short-term housing loan repayment. The duration period is either equal to or less than 5 years for repayment. Borrowers who choose this option generally make the repayment in two years.

Those who can manage this minimum tenure for home loan repayment are debt free in a shorter period. This minimum tenure for a home loan depends on the borrower’s capacity, as the EMI and Loan tenure are reciprocal to each other i.e. if period is less, EMI is higher, Borrower manages to save on the total interest in short period as opposed to the maximum tenure for home loan repayment. However longer tenure increases the home loan eligibility for higher loan limit. Home loans are based on floating interest rates, and once the interest rates are revised to go down, you can grab the opportunity to make larger paybacks in that period. Always remember the ground rule, do not allow the EMIs for home loans to exceed your budget. Do not allow the home loan to burden your peace of mind and disbalance your credit score for home loan.

Maximum tenure vs Minimum tenure

The housing loan tenure and the interest rate together decide the EMI. Following the reducing balance method, the EMI is computed in favour of the borrower. As discussed earlier, minimum tenure for home loan repayment increases the EMI and maximum tenure for home loan reduces the EMI.

You must choose the home loan tenure based on your financial capability. The maximum tenure for home loan repayment is offered to younger applicants. Older applicants have to accept shorter tenure for home loan repayment as the home needs to be returned before the age of retirement or cut off age decided by the lender.

Factor to consider while choosing home loan tenure

The repayment period is dependent on a combination of factors that include the loan amount. If the loan amount sought by the borrower is sizable, it isn't always possible to opt for a short tenure for home loan repayment. The principal amount and the interest component can be quite steep if you are in a hurry to complete the repayment.

Repayment is directly proportionate to capacity. It all boils down to calculations. Once you have the figures with you, after calculating using home loan emi calculator, you can divide the repayment amount according to your convenience. You can set a target to adjust EMIs to agree with your capacity.

The lenders, as previously discussed, are watchful of the age of the borrower. So, if you are a borrower searching for a loan at an older age, you can include a co-applicant to avail home loan benefits. The younger applicant needs to have a healthy credit score to act as a guarantee for the home loan application.

Borrowers choosing the maximum tenure for home loan repayment can carefully plan their loan repayment tenure with a bulk prepayment which will help them to pay off their loans early, get lower EMI rates and save on the interest cost. This will help them save on interest rates t. You can either make a foreclosure by prepaying the outstanding home loan amount or make a partial prepayment multiple times during the maximum tenure for a home loan.

Best tenure for a home loan

In the given situation where the repo rate has been increased by the RBI to manage inflation rates, there has been a direct impact on home loans. The impact would be more so on those wanting to make a repayment with minimum tenure for a home loan than those repaying through maximum tenure for a home loan. Therefore, going by the most convenient tenure, it can be said that the best tenure for home loan repayment is the one with maximum tenure for a home loan. You can pace up repayment with prepayment and a lumpsum return which will reduce the interest burden on the loan tenure. This lightens the load on the principal sum. You can use the increments in the salary for faster home loan prepayment. So instead of having to rush with a maximum tenure for home loan repayment, this will be a comfortable way to repay unless you are nearing the threshold of retirement.

Bank of Baroda home loan tenure

If you are looking for home loans with the most attractive option, there is no reason to search for any other bank than the Bank of Baroda. To know more details about Bank of Baroda home loan interest rate then click on - Retail Loan Interest rates. The maximum tenure for home loan repayment is up to 30 years Borrowers searching for transfer facility of home loans from other banks and financial institutes will find attractive low interests from the Bank of Baroda. The loan seeker needs to be an Indian resident, Person of Indian origin, NRI or overseas Citizen of India. The age of the borrower should be more than 21 years and can be salaried or self-employed. The minimum CIBIL core should be 701. Check the other eligibility criteria from the bank website and apply for the best home loan deals with the Bank of Baroda. Not only are their home loan features friendly, but their age limit has been maximized for housing loan maximum tenure. Visit the website to avail the best home loan options today.

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A person living in a rented apartment dreams of buying a home. However, buying a home or even preparing to buy one, is a story by itself. Eclipsing all the other concerns like the locality, amenities, and connectivity is finance. Potential homeowners search for lenders who can loan them the principal sum to build a house. While banks and other financial institutes are more than willing to disburse the loan, varying interest rates are a cause for concern. Home loans come at either floating interest rates or fixed interest rates. The decision to choose one over the other is vital for a borrower as that affects the EMI repayment rate plan. Floating interest rates, as the name suggests means that the rate of interest paid by the borrower is directly related to the current financial environment. If the bank interest rate falls, then the interest rate of the EMI too will fall and if the interest rate goes up the EMI rate too will move up. The term fixed rate is somewhat perplexing. The term gives assurance of a fixed value, but do not ignore the fine print where it may state that the loan provider can raise the interest rate at any time due to certain developments. These can be called fixed-floating rate home loans where the rate of interest may increase under some conditions but not to the extent of floating loans. Despite all the smart and clever terminologies, there is a fixed rate home loan but to be sure that you do not get trapped in any nuanced clauses it is best to have the document perused by legal experts before opting for this loan. Floating loans are offered at comfortable interest rates by lenders over fixed home loans. Let us take you through fixed vs floating interest rates in greater detail.

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