How To Change Your Home Loan Tenure And Reduce Interest

Your home loan tenure is the total period over which you are expected to repay the borrowed amount through regular EMIs. It affects both your monthly repayment and the total interest payable over the loan period. A longer tenure generally results in a lower EMI because the repayment is spread over more months, but it can increase the total interest outflow. A shorter tenure generally means a higher EMI, while potentially reducing the total interest payable over the repayment period. The original tenure is determined by factors such as the loan amount, applicable interest rate, and your repayment capacity at the time of loan sanction. Your tenure may be adjusted later through specific requests, subject to the lender's assessment and applicable terms. Understanding the relationship between tenure, EMI and interest can help you assess whether changing the tenure is suitable for your current financial position and repayment capacity.

How does changing home loan tenure affect interest?

Changing home loan tenure changes the period over which the outstanding principal remains unpaid and therefore can change the total interest payable. A shorter tenure generally means the principal is repaid faster. This can reduce the total interest accumulated over the repayment period, but the scheduled EMI is usually higher. Extending the tenure can lower the EMI by spreading repayment over a longer period, but the longer repayment period can increase the total interest payable.

The actual impact depends on the outstanding principal, applicable interest rate, remaining tenure, repayment history, prepayment and other loan terms. Use your current loan statement and revised repayment schedule for account-specific figures. The reference material confirms that shortening tenure can reduce total interest while increasing EMI, whereas extending tenure can reduce EMI but increase overall interest cost.

You can potentially shorten your home loan tenure by increasing scheduled repayments or reducing the outstanding principal through eligible additional payments.

Common options include:

Increase your EMI: If your income and monthly budget allow it, a higher EMI can allocate more towards repayment of the outstanding principal. This can help reduce the remaining tenure.
 

Make an eligible part-prepayment: A part-prepayment reduces the outstanding principal, subject to the applicable loan terms. Depending on the available repayment option selected, the resulting benefit may be reflected in a shorter tenure, lower EMI, or a revised repayment structure.
 

Make a lump-sum payment: A planned lump-sum payment from available funds can reduce the outstanding principal. Before making the payment, check the applicable terms and how the lender will apply the amount.
 

Review the repayment structure: Regularly reviewing your loan statement can help you understand the outstanding principal, remaining tenure, and current EMI. You can then assess whether a higher repayment amount is affordable.
 

Do not increase your EMI to a level that makes future payments difficult. A lower outstanding balance is useful only when repayments remain regular and sustainable.

Steps to request a change in a home loan tenure through Bajaj Finance

You can request a change in home loan tenure by reviewing your loan account and submitting a request through an authorised servicing channel. Before making the request, check your current EMI, outstanding balance, and repayment schedule to understand how a revised tenure may affect your repayments. The available options and applicable terms depend on your loan account and lender's assessment. 

Steps to review your loan before requesting a tenure change:

1. Sign in to the Bajaj Finance Customer Portal using your registered mobile number and OTP.
2. Go to Service or My Relations and select your active home loan account.
3. Open the available service or request section for your loan account.
4. Select the relevant option to request a home loan tenure change, where available.
5. Choose your preferred tenure option and review the revised EMI or repayment details.
6. Submit the request and complete any verification required through the authorised channel.
7. Save the Service Request (SR) number, if provided, to track the request.
8. Continue paying your existing EMI as scheduled until the tenure change is formally confirmed and the revised repayment schedule is issued.

After submitting the request, review the confirmation and revised repayment schedule once the change is approved and processed. Continue meeting your existing repayment obligations until you receive formal confirmation of the revised terms. If your account has overdue dues or a legal notice, check the current outstanding amount and account status separately, as a tenure change does not automatically clear existing dues. 

Should you reduce EMI or home loan tenure?

The choice between reducing your EMI and reducing your home loan tenure depends on whether your priority is lower monthly outgo or faster repayment. Reducing the EMI can provide greater monthly cash-flow flexibility, but may extend the repayment period and increase the total interest payable. Reducing the tenure can help you repay the loan sooner and potentially lower the overall interest outflow, but usually involves a higher EMI. Making a part payment can also reduce the outstanding principal, although it utilises funds that may be needed for other financial obligations. Before choosing an option, compare the revised EMI with your regular household expenses, emergency funds and other repayment commitments. If you have missed EMIs, prioritise bringing the account up to date before changing the repayment structure. A tenure change does not automatically clear existing overdue amounts or resolve a legal notice.