Home Loan EMI: Know this important thing before taking a long term home loan...


If you are thinking of taking a home loan, then you have to keep some important things in mind. Because you may suffer loss by taking a home loan for a long time. On the other hand, if you take a loan for a short period, you may have to face both advantages and disadvantages. This is because long-tenure home loans are not necessarily bad. Sometimes only short-term home loans are beneficial for people. Of course, saving on interest costs makes short-term loans better.


If you decide to repay a home loan of Rs 50 lakh in 15 years at a 9 percent interest rate, you pay Rs 41.28 lakh as interest, but if you decide to repay the same home loan in 25 years. , then you have to pay interest of Rs 75.87 lakh. Choosing a shorter tenure option helps a lot, but a longer tenure home loan has its advantages. This is why a long-term home loan can be considered.

40 percent EMI of monthly income is reasonable
According to experts, generally, an EMI of up to 40 percent of the monthly income is considered appropriate, but sometimes customers choose a higher EMI to repay the loan faster. If a family is using a large portion of the income to repay the home loan, cash flow problems may arise. In such a situation, if someone loses his job decides to take leave, or suddenly faces some big expense, then managing the home EMI can be a difficult task.

Whereas in the case of long-term home loans, the EMI is comparatively less than the amount payable on short-term loans. This can provide some breathing space for the family if there are some cash flow issues. You can prepay a 25-year home loan in 15 years but try to approach your lender to extend the tenure of your home loan from 15 to 25 years, and for this, you will have to go through the verification process once again.


Emergency fund
Your credit score may be affected if you do not pay EMI on time. First of all the customer needs to make a plan to repay the home loan. In case of job loss, the lending bank will not give any concession to the borrower on EMI payment. Therefore, most experts insist on maintaining an emergency fund equal to 6 to 12 months of household expenses. Higher EMIs on short-term home loans require more emergency corpus as compared to long-term home loans.

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