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How to Trim Your Home Loan Tenor

  • Highlights

  • Loan tenor depends upon age and income, among other factors

  • The shorter the loan tenure, the better it is

  • Make prepayment a priority

  • Increase the EMI amount

Owning a home is a dream for many and an important life milestone. The joy of owning your own home comes from the stability, security, and satisfaction it provides. There’s nothing like putting down your roots in a space that’s truly yours.

While a home loan is extremely beneficial in achieving this dream, you don’t want to be blindly paying EMIs for the rest of your life. The interest cost of a home loan is large, as it is spread over many years. However, you can take certain steps to save on your interest payments.

One of the most effective ways to do that is by considering the loan tenor, while you’re calculating the home loan EMI. Tweaking this one detail can do wonders for you, in terms of saving on interest and thereby reducing your EMI.

What is a home loan tenor?

The loan tenor is the period of time taken to repay the loan along with the interest. The tenor of a loan depends on several deciding factors like income and age of the borrower. The remaining length of the borrower’s career is also important, as it decides their capacity to repay the loan. Another deciding factor is the purpose of the purchase of the home.

Why you should keep the tenor short

Keep the home loan tenor as short as possible. It can get very tempting to opt for a 25 to 30-year tenor because the longer the tenor, the lower is the EMI. While such a situation would put less pressure on you now in terms of monthly payments, in the long run, you will be at a loss.

When the tenor is longer, the interest payout is higher. If you take a loan with a tenor of 10 years, the interest paid is around 57% of the loan amount. However, that will shoot up to around 125% percent if the tenor is increased to 20 years.

Here are two ways in which you can trim the tenor:


Make prepayment a priority. In case you get a bonus or your salary is increased, you can use that amount to partly prepay your home loan. Prepaying will reduce the principal amount, thereby reducing the tenor and the total interest payable. Certain home loan schemes offer incentives like no foreclosure charges.

Increase the EMI

If you can manage it, increase the EMI to as much as practically possible in order to reduce the tenor. This, in turn, will reduce the overall interest payable.

Factors that affect Home Loan eligibility _ Bajaj Finserv

Look out for schemes that allow you to increase the EMI amount to match the increase in your income over the years.

This way you can reduce your loan tenor as well as the financial burden of the loan because owning a home shouldn’t mean a lifetime of EMIs and heavy interest payments. We at Bajaj Finserv provide pre-approved offers on home loans, making them easy to avail. Simply provide a little information and get your pre-approved offer.

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