Planning to Change Your Home Loan Tenure? Know These Key Points First
Buying a home has become a dream that often requires financial support. With property prices rising rapidly, many middle-class families rely on home loans to purchase a house. Since a home loan usually runs for many years, borrowers sometimes think about changing the loan tenure midway. Some prefer to extend the tenure to reduce their monthly EMI, while others shorten it to finish the loan faster.
Before making any change to your home loan tenure, it’s important to understand how it affects your finances.
Generally, the bank offers two options:
When Reducing the Loan Tenure Makes Sense
If your income has increased or you’ve finished paying another loan, shortening your home loan tenure can be a smart move. By increasing your EMI by around 10–15 percent, you can repay the loan much earlier.
The biggest advantage? You save a significant amount on interest. A shorter tenure means the bank charges interest for fewer years, which reduces the overall cost of your loan.
Before making any change to your home loan tenure, it’s important to understand how it affects your finances.
What Happens When You Change Your Loan Tenure?
When you request your bank to modify the loan tenure, the bank recalculates your repayment schedule based on the remaining loan balance. This is usually easier in floating-rate home loans.Generally, the bank offers two options:
- Increase the EMI and reduce the loan tenure
- Reduce the EMI by extending the loan tenure
- Your decision will directly impact how much interest you pay over time.
When Reducing the Loan Tenure Makes Sense
If your income has increased or you’ve finished paying another loan, shortening your home loan tenure can be a smart move. By increasing your EMI by around 10–15 percent, you can repay the loan much earlier. The biggest advantage? You save a significant amount on interest. A shorter tenure means the bank charges interest for fewer years, which reduces the overall cost of your loan.
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