Home Loan Tenure Tips: Buying one’s own house is still a dream for many people. Due to rising prices, people take home loans from banks to fulfill their dreams. However, it is very important to keep one thing in mind while taking a home loan. That is to choose the right period i.e. tenure.

Often people are confused about whether to keep the EMI low or try to finish the loan quickly. In fact, this decision of yours can make a big difference in the interest amount. Therefore, it is considered wise to choose the tenure by maintaining the right balance. Let us know about this.

Tenure makes a big difference

• If a person takes a home loan of Rs 2 crore at an interest rate of around 8.5 percent. Also, if the tenure of this loan is fixed for 20 years, then the interest comes to around Rs 2.15 crore. The total payment figure reaches approximately Rs 4.15 crore.
• If the same loan is taken for 25 years, the interest amount increases to about Rs 2.86 crore. The total payment reaches to approximately Rs 4.86 crore. This means that in just a span of 5 years, a huge difference in interest is clearly visible.

Benefits are available in short tenure

• If the same loan is taken for 10 years, the total interest comes down to around Rs 98 lakh. The total payment figure also comes down to around Rs 2.98 crore.
• This means that just by changing the tenure there is a big difference in the interest. You have to pay a lot more money in the long run.
• The difference in interest alone between 10 years and 25 years tenure is around Rs 1.9 crore. Which clearly shows that a long loan seems comfortable but the interest amount on it is very high.

Experts’ opinion

According to a report published in News 18, financial experts often suggest that while taking a home loan, it is better to initially choose a longer tenure like 20 to 25 years. Due to which the EMI burden does not seem too heavy. However, in future, when your income starts increasing, you can reduce the loan tenure by making prepayment from time to time. If you have some extra money, you can also use it to repay the loan. Due to which you will get relief on total interest.

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Debt Trap Solutions: In today’s time, rising inflation, children’s education expenses and sudden medical bills spoil the budget of many families. In such a situation, people resort to other loans including personal loan to meet their needs. However, gradually these loan installments start appearing heavy.

In many cases, a person gets trapped in the debt trap without realizing it. When the situation starts getting out of hand, then it is realized. However, in such a situation, instead of panicking, one can get out of the debt trap by taking right steps. Let us know about some such measures…

Look at each loan differently

It is not necessary that all types of loans are the same. For example, home loans are usually at low interest rates for a long period of time. Whereas higher interest is charged on credit card or personal loan.

Therefore, first of all make a list of all your loans and pay attention to their interest rates and EMIs. After this, try to eliminate the loans with high interest first, so that the burden can be reduced quickly.

Give priority to expensive loans first

If your credit card dues are increasing every month, then understand that you are in trouble. Banks charge more interest on this, due to which the loan increases rapidly. Therefore, first of all try to pay the credit card dues in one go or in two-three installments as soon as possible. This will reduce the financial pressure on you.

Keep an eye on monthly expenses

In changing times it is seen that people’s income is less and expenses are more. Such people later get trapped in the debt trap. Therefore, it is important to carefully review all your expenses every month.

This will help you understand where money is being wasted and what can be cut. By doing this your savings will increase and your money balance will remain better.

Use Bonuses and Refunds Wisely

When you get money at once in the form of bonus or tax refund, it is very important to spend it wisely. It is better to use this amount to repay the loan first. If this is planned in advance, then this money can be saved from being spent unnecessarily. Also, your financial position may become stronger.

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