A home loan helps you achieve peace of mind by providing you one of the basic necessities of life- a roof over your head. But the same loan can be the cause of sleepless nights at some later stage if not borrowed right for a stipulated period. Tenure is the time period for which you borrow the amount and within this period you have to repay. With so many different loan schemes floating in the market you have to weigh the pro and cons before you sign on the dotted line and for how long.
Arriving at ideal loan tenure is as critical as selecting a lender or deciding between fixed and floating options. Loan tenure dictates your total period of debt and the quantum of monthly repayments.
Impact of Short Term Loan
Some home loan borrowers opt for short term loans say 5 to 10 years, these people are totally risk averse and want to clear and intend to be debt free sooner. The borrower is minimally impacted by long term interest rate fluctuations and market volatility. The benefits of a short term loan are tilted towards the borrower, however not all borrowers can afford the high EMI repayments every month. Setting aside hefty monthly repayments may not be feasible for all borrowers. There are monthly commitments and expenses which borrowers cannot overlook apart from home loan repayments. [Read more…]