All-you-need-to-know before deciding your home loan tenure!

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• All-you-need-to-know before deciding your home
  loan tenure!
• Taking a home loan is a big life decision. Made
  with jurisdiction and with proper knowledge about
  the entire process, it can give you the biggest
  gifts in life a place to call home. But if you
  do not take proper steps before applying for a
  home loan, it can become a headache of a
  lifetime. The emergence of new finance companies
  in the market that offer low interests home loans
  has really made it much easier to obtain a home
  loan. But there are some things that should be
  kept in mind before signing the papers. One of
  the most important things is the tenure. Let us
  discuss the factors that you should keep in mind
  before deciding the length of the tenure.
• Steer clear of misconceptions
• Loans have an age-old stigma attached to them
  especially in our country. This is perhaps the
  reason people want to be rid of them as quickly
  as possible. According a survey conducted with
  people applying for home loan in Delhi, most of
  the applicants preferred a short tenure but is
  short tenure a good idea or should you go for a
  longer tenure?
• Advantages of opting for a longer tenure
• One of the most widely understood benefits of a
  longer tenure is that you would have to pay
  smaller monthly EMI instalments. As a
  consequence, your loan eligibility would
  increase. So if you require a substantial amount
  of home loan and you arent eligible for it,
  increase your tenure. There are home loans
  available that offer tenure as long as 30 years.
• If you opt for a longer tenure, the situation is
  under your control. What it essentially means is
  that in case you want to increase your fixed
  obligation (amount of monthly EMI), you can
  visit your bank branch and file an application.
  Compared to that, if you have taken a loan for a
  shorter tenure and you encounter financial
  problems, it would be very difficult to get your
  bank to increase the tenure.
• Whether you take home loan for short tenure or a
  long tenure, the overall interest remains the
  same. It is a misconception that short tenure
  home loans generate lesser interest. This was
  perhaps, one of the reasons why during the
  survey, people who were applying for home loan
  in Delhi, preferred a shorter tenure. If youre
  concerned about paying interest in excess and
  want to save money, you should go for low
  interest home loans.
• Another major benefit of opting for a longer
  tenure is that it acts as a cushion against the
  probability of interest rate increasing in the
  future. Many people take loans on floating rate,
  hoping the rate would decrease in the future as
  the economy grows. However, things dont always
  happen as we imagine them and it is smart to
  prepare for the worst case scenario. So if you
  go for long tenure, small EMI, even if the
  interest rate increases in the future, youll be
  able to manage the situation. But if youre on a
  short tenure and already paying the maximum EMI
  as per your capabilities, youll be in real
  trouble if the EMI increases. This is another
  reason to go for a longer tenure.

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Even if you have surplus money and you arent
bothered by above scenarios, you still shouldnt
go for a short tenure home loan. By opting for
longer tenure, you get tax benefit on principal
as well as subsidy on interest. So why would you
want to exhaust your money on paying excess taxes
just so you could get rid of the home loan?
Instead, you can use your surplus money to secure
your future, by opting for retirement planning
policies. All in all, long tenure is always the
better choice when taking a home loan.