Home Loan tenor refers to the duration within which the borrower agrees to repay the loan amount in full, including both the principal amount and the interest accrued atop it. Typically, Home Loan allow for a long repayment tenor, often stretching up to 32 years, allowing borrowers ample time to repay the loan amount.
A change in your tenor directly affects your interest outflow as well as your overall EMI amount. Thus, it is imperative you choose a Home Loan tenor that is most suited to your financial standing and future goals.
The ideal Home Loan tenor will enable you to become debt free quickly while allowing financial room for unforeseen expenses.
The maximum tenor for a housing loan is the period of time for which you and your lender agree on the repayment of the loan. This is repaid in EMIs (equated monthly instalments) over a period of up to 32 years. This is the case if you apply for the loan at a young age and repay it before the maximum age limit to avail of a Home Loan.
There is no one ideal tenor that fits all Home Loan cases. Every borrower’s needs, suitability, and capacity differ, and so, the ideal tenor varies from person to person. Borrowers are, hence, advised to plan for the future and calculate a repayment period that takes various factors into account. Some of these are:
- The Loan Amount: The Home Loan amount you seek has a considerable impact on the duration it may take to finally close the obligation. If you want a sizeable sanction, it may take you longer the principal amount and the interest component; especially if you would like to avoid steep EMIs.
- Repayment Capacity: While calculating your repayment tenor, you should also account for your monetary obligations and duties, as your repayment capacity may already be divided. In this case, choosing the right tenor will help you adjust your EMI amount in a way that suits your repayment capabilities.
- Retirement Age: Most lenders benchmark a certain age, after which, they hesitate to offer Home Loans. Older applicants may struggle in this aspect, as 75 is typically considered the maximum age, that too at the time of loan maturity itself. If you are a senior borrower, you may want to assess your desired Home Loan amount, keeping in mind the possibility of a limited repayment tenor.
However, older individuals can still improve their chances of getting better Home Loan terms if they include a financial co-applicant with a good credit score or a guarantor in their application.
| Point of Difference | Long-term Home Loan | Short-term Home Loan |
|---|---|---|
| Tenor | Usually, a Home Loan is termed a long-term loan when its repayment tenor exceeds 5 years and can stretch up to 32 years. | Home Loan with a repayment tenor of less than 5 years. |
| Interest Rate | The interest rate is usually lower due to lower risks of the lender. | The interest rate is usually higher due to the lender’s risks being higher. |
| EMI | The EMI amount is lower, making these loans more feasible. However, you spend more on interest payment. | The EMI amount is higher but the total interest outgo is lower. |
There are 4 factors that can help influence your Home Loan Tenor as explained below.
High Loan Amount: As a borrower, you may be offered a longer tenor when your loan amount is high. This is so because the EMI should not be more than 40% of your net income. The maximum benefit of a Home Loan can be extracted from the maximum tenor.
EMI: If you have a low EMI, your loan tenor will be high. On the contrary, if you are willing to shell out the maximum EMI that you are allowed to, you can reduce your tenor by at least a few months.
Age: Home Loan tenors can be as long as 32 years. But to avail maximum benefits of it, your age should be well within the age limit. For instance, if you are a salaried individual and apply for a loan at an early age, such as 30 years, you can avail maximum Home Loan tenor, up to 75 years of age. Likewise, if you are 40 years of age during the time of loan application, you can avail a tenor that is 10 years less.
Rate of interest: When your interest rate is low, your EMIs reduce and eventually your Home Loan tenor reduces.
Home Loan Tenor can be changed voluntarily anytime during the course of the loan. You can visit the nearest branch of or contact the customer care number/sales representative and give a request for the same.
The concerned official will go through your loan statement and latest income statements before allowing you to change the tenor.
The Home Loan EMI Calculator is an apt tool for such dilemmas. Using this online tool is easy and free of cost – allowing you the foresight to plan your Home Loan repayment realistically. Here is how to best use the tool to your advantage:
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Use the slider to accurately select your desired Home Loan amount.
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Use the next slider to indicate your preferred Home Loan repayment tenor.
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Use the third slider to select the current Home Loan interest rate.
The calculator then projects your possible Home Loan EMI calculation, your total Home Loan payable, along with the principal and interest break-up. This forecast helps you assess the EMI amount, calculated considering your preferred repayment tenor to see if it fits your budget or not. You can use the tool as many times as you would like, till you reach a repayment tenor that satisfies all your Home Loan needs.
*Terms and conditions apply.
Frequently Asked Questions
At Bajaj Housing Finance, the maximum Home Loan tenor is up to 32 years.
The ideal Home Loan tenor is that where you can pay comfortably and also save on excess interest. There is no specific tenor that is common for all and may depend on the borrower.
Yes, Home Loans with longer tenors help the borrower to repay with ease – although they may have to shell out excess funds as interest.
The tenor does not have a direct impact on your credit score. In an indirect way, a longer tenor can possibly only improve your credit score considering you get a comfortable time to repay your loan thereby minimising your possibility of defaulting.
Your Home Loan tenor automatically increases when there is a rise in the interest rate. You can also reduce your tenor by using the facility of prepayment.
Reducing the EMI will make your repayment easier by spacing out the amount into a greater number of instalments. However, it will also increase the overall outgo of your interest payment.
On the other hand, if you reduce your tenor, your EMIs will increase, and so will your monthly obligations. However, your total interest outgo will decrease.
