Home Loan Tenure: Short Term or Long Term – Which is the Better Option?


To buy a house is a dream many of us have. Arranging funds to find it, however, can be quite a difficult task. The recent statistics show that mortgage loans have been on a rise in India. The home loans are expected to grow at a compound annual growth rate of more than 20%. Convenient and affordable mortgage loans have made it easier for people to purchase their dream homes.

As this housing loan segment has immense potential, many financial institutions have entered this market. It has thus made it simple and easy for borrowers to get home loans. Competitions have ensured that they get the best deals.

You can avail of home loans of a short term or long term. You can consider the below factors and decide which one is a better option.

1. Tenure

Short term loans have a period of 5 years or less. Long-term loans, on the other, have a period of 5 years to 30 years. You should decide for how long you need the liability and accordingly choose a tenor that is best suited for you.

2. Interest Rate

Short-term loans have a higher interest rate, whereas long-term loans have lower interest rates. Technically this means that you end up paying lesser as compared to a long-term loan. A longer tenure binds you with a higher interest rate. Choose an option where you are charged lowest home loan interest rates.

3. Eligibility

Your income level is an important factor in deciding if you are eligible for a loan or not. However, as short term loans require high-income levels, it is easier to avail of a long term loan in case your income levels do not match up to the eligibility.

4. EMI

EMI is the monthly installment that is your payout towards your mortgage loan. A short term loan aims at closing your liability early and thus has a higher amount as EMI. Thus, you would need to have a high-income level to avail of a short term loan. If however, you wish to have a small payout amount, you should avail of a long-term loan. Calculate your monthly expenses, what amount you can afford as an EMI, and then decide between a short term loan or a long term loan.

5. Age and Job Stability

Your age should be an important factor in your decision. If you are young and have just started earning, you can bind yourself for a longer liability and avail of a long term loan. If however, you are old, you should consider a short-term loan so that you can close your liability. Further, you need to be sure about your job security. Only if you have a secure job, you should bind yourself with a long term loan. If not, then you must choose a short term tenure for your mortgage loan.

In conclusion, deciding on the tenure of your mortgage loan is a big decision. You should consider all relevant factors before making a choice. Always scourge the market to compare and get the best deals for you.

Share this


Adolphus Busch: The Visionary Behind Beer Powerhouse Anheuser-Busch

Adolphus Busch was born on July 10, 1839, in Kastel, Germany, and later immigrated to the United States in 1857. His journey to becoming a brewing magnate began when he joined the E. Anheuser & Co. brewery in St. Louis, Missouri, which was owned by his father-in-law, Eberhard Anheuser. With a keen business acumen and innovative spirit, Busch quickly...

The Story Behind the Famous “King of Beers” Slogan for Budweiser

Budweiser is a prominent name in the beer industry, known for its iconic slogan "King of Beers." This slogan has an interesting history that reflects the brand's journey in the United States. German immigrant Adolphus Busch arrived in the country in 1857 and later married Lilly Anheuser. He began working at his father-in-law's brewery, which would eventually become Anheuser-Busch. By...

10 Fascinating Facts About Dos Equis The Most Interesting Man in the World

When it comes to iconic advertising campaigns, few can rival the impact of "The Most Interesting Man in the World." Created by Dos Equis (Dos XX), this character quickly became a cultural phenomenon. Here are 10 fascinating facts about the man who captured the world's imagination. If you are interested to learn more about the story of the beer, you...

Recent articles

More like this