POSTED BY November 8, 2012 10:02 am COMMENTS (13)ON
I have booked an apartment(Read to move it) and decided on SBI for taking loan. I am confused if I should take 10/15/20 year tenure. I looked up lots of articles but did not get the exact query that I have.
Loan amount is 35Lakhs. Interest rate is 10.15%
Loan type: MaxGain Overdraft account.
EMI vs Tenure:
10yr : 46,544
I have read about all the advantages and disadvantages of long and short tenure but here is my unique question:
If I take a 20yr tenure BUT pay EMI each moth equal to that of a 10 yr tenure, then, will I finish the loan in 10 Yrs? Meaning, I need to just pay 34,124 but I decide to pay 46,544. This means that the extra amount ( 46,544 – 34,124) would directly reduce the principle each month.
I want to have the advantages of a long tenure like less strain on my expenditure, more flexibility incase of job loss or recession as mandatory EMI will be less BUT I want to have the benefits of 10 yr tenure in terms of interest/principle ratio. Hence I want to know that if I choose a 20yr tenure but pay a 10yr tenure EMI, will the loan finish in 10 years? If not, how much more delay/early will it close?