Buying a home in modern India is not an easy thing. Whether you are living in rural or urban parts of the country, being a homeowner is one of the proudest moments of anyone’s life. To make home ownership affordable and easy, the Government and financial institutions have several home mortgaging options.
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Most financial professionals advise home buyers to choose a longer home loan tenure because of the lower EMI loan and tax advantages. Shorter repayment terms may not always be achievable due to financial constraints, but those who can do so should save money, build their credit, and acquire full property ownership as soon as possible.
The housing loan maximum tenure in India typically stretches up to 30 years. However, this can vary depending on the lender and your circumstances.
Advantages of a Maximum Tenure Home Loan:
- Lower EMIs: Stretching the repayment over a longer period reduces the monthly EMI burden, making it easier to manage your monthly finances.
Disadvantages of a Maximum Tenure Home Loan:
- Higher interest cost: You end up paying significantly more interest over a longer tenure. Even a small difference in interest rate can significantly impact the total cost of the loan over 30-40 years.
- Reduced financial flexibility: A long-term loan has tied up a significant portion of your income for decades, limiting your ability to save or invest for other goals.
- Opportunity cost: The interest paid on the loan could be used for other investments that might generate higher returns.
- Loan extends beyond your earning prime: There’s a risk the loan might extend past your peak earning years, making repayment challenging in the future.
Minimum Home Loan Tenure
The housing loan minimum tenure in India is generally around 2 years.
Advantages of a Maximum Tenure Home Loan:
- Lower total interest paid: By repaying the loan quickly, you end up paying significantly less interest compared to a long-tenure loan.
- Quicker debt payoff: You become debt-free faster, freeing up your monthly budget and potentially improving your credit score.
- Psychological benefit: Owning your home outright sooner can bring peace of mind and a sense of accomplishment.
Disadvantages of a Maximum Tenure Home Loan:
- Higher EMIs: The shorter repayment period translates to larger monthly EMIs, which can put a strain on your finances.
- May not qualify for larger loans: With higher EMIs, you might not be eligible for a very large loan amount.
- Limited options: Not all lenders offer short-tenure home loans, so you might have fewer options to choose from.
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Factors Affecting Home Loan Tenure
The length of your home loan tenure depends on a balancing act. Lenders consider your age, income, and creditworthiness to determine the maximum term you qualify for. However, a shorter tenure means higher EMIs but lower total interest, while a longer tenure offers lower EMIs but comes with significantly more interest paid overall. You’ll need to weigh your financial comfort against the total loan cost to choose the right tenure for you.
Age And Source of the Borrower’s Income
Finding the best tenure for a home loan depends on balancing your financial situation and goals. Home loans are granted based on a borrower’s capacity to repay them, which is, in turn, influenced by their income. As a result, your age and retirement age will determine your eligibility for the total loan amount. The typical retirement age for those who earn a salary is 60 years; thus, the maximum loan term you might receive would be equivalent to the number of years left on your contract.
Lenders are willing to regard 65 as the retirement age for professionals and business people if they are self-employed. As a result, self-employed borrowers can automatically qualify for house loans at a higher rate. Unless they can demonstrate that they have another reliable source of income, a person who is going to retire is typically ineligible for a home loan.
Age Of Property
The age of the building heavily influences your eligibility for a home loan. The sole recourse the lender has in the event of a default in debt servicing is the house, which is pledged as security for the mortgage. As a result, the lender will not grant a mortgage for some time greater than the remaining useful life of the property you wish to purchase.
An architect or civil engineer who does a physical audit of the property will determine the remaining life of the building. The age of a structure, unlike the retirement age, is not uniform and varies from one building to another based on factors like the type of material used in construction, the location of the property, etc. Due to erosion brought on by the salty sea breeze, properties near the sea may have a shorter residual life than those on plains.
A house loan’s term cannot exceed the remaining life of the property. If a loan is provided for a period longer than the property’s remaining life, the lender risks losing their security if the building is destroyed or collapses. Lenders typically avoid financing ageing and decaying real estate because of this.
Leasehold Residences
Even though the property may be in good shape, if it was built on leasehold land, the home loan duration cannot be longer than the remaining lease term since the lender would not want to take the chance of the lease not being renewed.
These situations are uncommon as land leases are often granted for a considerable time. However, this circumstance might occur if a property’s lease tenure is about to expire.
Home loan is one of the most commonly used financial aids by people in rural and urban India. As the real estate market continues to boom, people find it easier to buy a home via a home loan. In the post-pandemic era, the Indian government has made it easier for people to avail of home loans at an attractive interest rate.
Most banks will allow a maximum of 30 years of home loan tenure in 2024. The average age of service retirement is considered 58 years and hence if you’re a 28-year-old, you can avail yourself of the full home loan tenure of 30 years. If you need any help in availing yourself of a home loan, you must consult the real estate and home loan experts at NoBroker. If interested, please leave a comment below this article; our executive will be in touch with you soon.
An architect or civil engineer who does a physical audit of the property will determine the remaining life of the building. The age of a structure, unlike the retirement age, is not uniform and varies from one building to another based on factors like the type of material used in construction, the location of the property, etc. Due to erosion brought on by the salty sea breeze, properties near the sea may have a shorter residual life than those on plains.
A house loan’s term cannot exceed the remaining life of the property. If a loan is provided for a period longer than the property’s remaining life, the lender risks losing their security if the building is destroyed or collapses. Lenders typically avoid financing ageing and decaying real estate because of this.
Leasehold Residences
Even though the property may be in good shape, if it was built on leasehold land, the home loan duration cannot be longer than the remaining lease term since the lender would not want to take the chance of the lease not being renewed.
These situations are uncommon as land leases are often granted for a considerable time. However, this circumstance might occur if a property’s lease tenure is about to expire.
Home loan is one of the most commonly used financial aids by people in rural and urban India. As the real estate market continues to boom, people find it easier to buy a home via a home loan. In the post-pandemic era, the Indian government has made it easier for people to avail of home loans at an attractive interest rate.
Most banks will allow a maximum of 30 years of home loan tenure in 2024. The average age of service retirement is considered 58 years and hence if you’re a 28-year-old, you can avail yourself of the full home loan tenure of 30 years. If you need any help in availing yourself of a home loan, you must consult the real estate and home loan experts at NoBroker. If interested, please leave a comment below this article; our executive will be in touch with you soon.
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Frequently Asked Questions
Q. What are the factors one needs to check for home loan tenure?
Answer – The following factors should be checked for home loan tenure: Age and source of the borrowers’ income, age of the property, and leasehold residences.
Q. If my income is less, which type of home loan tenure should I opt for?
Answer – If the income is minimum, long-term home loan tenure is advisable as EMI costs much less than short-term home loan tenure.
Q. What is the maximum tenure for a loan against property in HDFC bank?
Answer – Maximum home loan tenure is 30 years, depending on the borrower’s income.
Q. SBI home loan minimum tenure for a 35-year-old salaried employee?
Answer – The SBI home loan maximum tenure for a 35-year-old salaried professional is between 20-23 years maximum.
Q. What is the maximum tenure offered under loan against property in HDFC bank?
Answer – The maximum home loan tenure offered by HDFC Bank in 2022 is 30 years.
Q. What are the factors one needs to check for home loan tenure?
Answer – The following factors should be checked for home loan tenure: Age and source of the borrowers’ income, age of the property, and leasehold residences.
