Home loans are long commitments. For some it is a relationship which lasts more than their marriage too. Funny as it sounds; home loans in India are a serious affair which requires a lot of efforts from you in order to ensure that you stay happy. Home loans can be paid in different tenure options and until you reach the age of retirement. These numbers are decided by the Bank/NBFC that deals with providing the best home loans to you. Generally in banking terms, minimum home loan tenures range from 15 years and the maximum tenure would be of 30 years. The retirement age is considered as 60.
What is Loan Tenure?
Loan tenure is the period you get in order to repay the home loan amount back to the Bank/NBFC. This tenure is decided firsthand before your loan application is approved.
Which is better? Long home loan tenure or short tenure?
Loan tenure depends on a variety of factors of which the top most is your loan eligibility. What tenure suits you best also depends upon your income level and how much money you can dedicate to repaying the home loan amount. You can use a home loan calculator and check if reduction in tenure is required or no.
Can we change home loan tenure?
Yes. If there are situations where you are not able to repay back the loan EMI on time due to budget constraints, then you can discuss with the bank regarding the possibility of increasing your home loan tenure. If the Bank/NBFC approves, then your home loan tenure can be increased and accordingly your loan EMI amount will reduce.
How Can I Repay Home Loans until I’m 75 years old?
Usually Banks allow maximum home loan tenure of 30 years to customers. In rare cases like Oriental Bank of Commerce, you can also get home loan tenure of 40 years. Now, LIC Housing Finance (LICHF) has partnered with India Mortgage Guarantee Corporation (IMCG) and they offer a special home loan scheme which allows the customer to repay the home loan until they reach the age of 75.
Here’s an example to help you understand how loan tenures work;
Mr. ABC who is 30 years old gets a home loan worth 40 lakhs at 8.5% interest for tenure of 15 years. Here we will show how much monthly EMI he will pay if the loan tenure kept increasing;
15 years = 39390
20 years = 34713
25 years = 32209
30 years = 30757
35 years = 29874
40 years = 29324
45 years = 28974
So you can see that earlier Mr.ABC would only get maximum loan tenure of 30 years which would help him repay the monthly EMI of 30,757 rupees by the time he reaches the retirement age of 60.
Now with this scheme, he can repay the monthly EMI of 28974 rupees by the time he reaches the age of 75. That’s almost saving 2000 rupees per month.
Overall, a scheme as such does help you in the long run to manage your finances and repay a home loan with ease. Be a reliable customer, pay your bills on time, maintain a good credit score and all this will help you get your dream of owning a home turn into reality.