Is it better to opt for longer tenure in home loan like 30 yrs ?

POSTED BY Santhosh_S ON January 5, 2014 10:13 pm COMMENTS (3)

Is it advisable to go for max tender as possible (20-30 years)  considering no prepayment charges? Also I assume by opting for max tender – we get max loan eligibility and can manage unexpected financial needs in future (having funds in other liquidity asset classes like MF/FD).

One disadvantage I could think of is, overall I would loose some money when my investment (in MF/FD) is less than home-loan interest (10.x%). Please let me know if I miss something on disadvantages (mainly on house loan interest computation – will it be more in initial years if I opt for more/max tender?)

3 replies on this article “Is it better to opt for longer tenure in home loan like 30 yrs ?”

  1. ashalanshu says:
    January 11, 2014 at 2:09 am

    Dear Santosh, taking a long term loan ‘ll be beneficial only if you can earn more money from the saved EMI amount by investing it elsewhere. The reason is interest outgo ‘ll be higher in a 30Y loan over a 20Y loan. Hence the extra interest outgo should be compensated by higher earnings that this outgo.

    Thanks

    Ashal

    Reply
  2. Sibin says:
    January 6, 2014 at 12:23 pm

    Hi Santhosh,
    Also read the below blog by Manish. This will give you a better understanding
    http://jagoinvestor.dev.diginnovators.site/2008/01/how-home-loan-emi-is-calculated.html

    Reply
  3. Sibin says:
    January 6, 2014 at 12:21 pm

    Hi Santhosh,
    Consider your EMI paying capacity keeping your earning potential in future as well. Select the shortest term possible with in your current and future earning capacity.

    Increasing term will not reduce the EMI proportionately.

    Disclaimer: This is my personal view on this

    Reply

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