A "low interest" loan shouldn't mean you have very little interest in paying it back!
  • How does the Home Loan Repayment Period Affect the EMI you Pay?

    Every person dreams of owning a home and while many manage to achieve this without any help at all, a majority of us need to take a home loan. Simply put, a home loan is a financial aid that helps you achieve your lifelong dream of buying a house. However, while availing a home loan may be easy, it comes with its very own sets of responsibilities that are to be fulfilled diligently.

    Yes, we are talking about the EMI (Equated Monthly Installments) that you need to pay on a monthly basis to your lender, in order to repay your Home Loan. And while there are many factors which influence the EMI you pay, the most crucial factor is the loan repayment period.

    But before we proceed any further, let us understand what exactly an EMI is?

    As mentioned earlier, EMI is a sequence of monthly payments that you make to your loan company to pay back the loan. This amount does not vary dramatically over time, unless there is a sudden change in the rate of interest, or you pre-pay a part of your loan’s principal amount. Since no lender will give you a loan without charging any interest on it, EMI is a mix of principal amount and the interest applied to the same.

    In the initial years of the repayment period, a huge chunk of your EMI goes to interest. However, over time, this ratio reverses with principal being the major component of your EMI. This is because as principal amount reduces over the years, the interest applied reduces too.

    Loan Tenure vs. EMI

    As a rule of thumb, greater the home loan repayment period, lesser is the EMI you will pay and vice-versa, for a particular loan sum and rate of interest.

    For example, let us assume that you need a home loan of Rs. 40,00,000 at an interest rate of 11 percent. If you choose to repay your loan over a period of 30 years, then your monthly commitment will be Rs. 38,093. However, if you reduce your tenure to, say 15 years, your EMI will shoot up to Rs. 45,464. The following table illustrates how your EMI will vary with respect to your home loan tenure, for the mentioned rate of interest and principal amount.

    Loan Repayment Period EMI
    5 years Rs. 86,970
    10 years Rs. 55,100
    15 years Rs. 45, 464
    20 years Rs. 41, 288
    25 years Rs. 39,205
    30 years Rs. 38,093

    Now that you know how home loan EMI and home loan repayment period are related, let us take a look at how you can find a balance between the two.

    Considering that an EMI is a serious financial commitment, there are a couple of factors you need to take into account before you decide on your loan tenure.

    • Age – When it comes to availing a home loan, your age plays an important role. Since your lender expects you to pay the loan before you retire, your age will play a part in determining your tenure. If you are in your 20s or early 30s, then you will have better chances of getting a longer repayment period.
    • Your Income – Your monthly income, expenses, and obligations must be considered before choosing an EMI amount. Ideally, you should be able to pay your monthly installment easily, after factoring in the above expenses. Once you arrive at an amount you’re comfortable paying on a monthly basis, you can then decide on the tenure.
    • Pre-paying – Many lenders have the provision of pre-payment towards the home loan principal amount. Doing this brings down the principal sum and in turn, the interest to be paid. This correspondingly leads to a reduction in the EMI, which may be translated into a change in loan tenure.
    • Life Stage – It is wise to consider your life plans before you settle on an EMI amount. If you are going to start a family, then your monthly expenses will only increase. In such a case, it is advisable to go for a longer tenure and a lower EMI. However, if you are approaching the age of retirement, then your EMI and loan repayment period will be such that your loan is repaid in full by the time you retire. This would generally mean a shorter tenure and a larger EMI.

    The above factors will help you determine the kind of home loan tenure you should be looking at, while opting for a home loan. It is important to do thorough research on this front and arrive at an EMI amount that you are comfortable paying on a monthly basis. You can also use our Home Loan EMI Calculator to find out how much EMI you may have to pay, to own your dream house.

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    Loan Tenure vs. EMI Reviews

    • DHFL Home Loan
      "Not satifactory service"
      0.5 1.0/5 "Really Bad"
      I got home loan with DHFL FINANCIAL INSTITUTION . I am not happy with the services even the customer service response is not so good . The loan amount which they gave was good but they charge very high rate of interest . Overall it is fine experience .
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 22, 2019
    • LIC Housing Home Loan
      "Should be transparent and prompt"
      0.5 1.0/5 "Really Bad"
      I have housing loan from LIC, the interest is high. My property located in lucknow but I am staying in mumbai hence for the balance transfer its very difficult they need lots of loan documents. Without proper notification they increased the interest but for the reduction they have lots of procedure and I need to pay Rs.1000.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 22, 2019
    • LIC Housing Home Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      LIC HOUSING FINANCE has also offered me a home loan. The process was quick and I got the loan on time. The rate of interest is and there were processing charges as well both are very nominal compare to others in the market . The tenure period is 10 year and it is sufficient .
      Was this review helpful? 0
      , vadodara
      Reviewed on Apr 21, 2019
    • review Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I have SHAMRAO BANK i have took home loan from this bank . Their service is better, Overall the whole loan process was easy and hassle free. Only the rate of interest were high with this bank. The processing fee is nominal with this bank . And the loan amount is not satisfactory .
      Was this review helpful? 0
      , pune
      Reviewed on Apr 21, 2019
    • HDFC Limited Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      HDFC LIMITED is the bank where i have taken the housing loan the loan amount they have offered was good and satisfactory added on that the documentation process was simple and pretty simple documents. I got the loan within one day, the rate of interest was nominal.
      Was this review helpful? 1
      , bangalore
      Reviewed on Apr 20, 2019
    • DHFL Home Loan
      "Very good service"
      0.5 4.0/5 "Great!"
      I had taken a Home Loan from DHFL LTD a long time back and the loan is still running. The loan amount has been sufficient but the interest rate with them has been quite high, where they had not reduced the interest rate as well. The processing fee and charges which they had made has also been high when compared with the other banks.
      Was this review helpful? 1
      , faridabad
      Reviewed on Apr 20, 2019
    • HDFC Limited Home Loan
      "Interest rate should be reduced"
      0.5 4.0/5 "Great!"
      My housing loan process was simple with HDFC Ltd, they took only 3 working days to verify and sanction the amount, they didn't ask any guarantor for my loan, but I feel the interest is bit higher, I took the amount of Rs. 5 lakhs for the duration of five years.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Apr 20, 2019
    • ICICI Bank Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      I have applied or the housing loan with the ICICI BANK the documentation process was simple and easy to get the loan they have given the 95% of value as a loan amount. The duration for repaying the loan is for 20 years and using from last 2 years. The rate of interest was 8.6% which was nominal.
      Was this review helpful? 2
      , pune
      Reviewed on Apr 19, 2019
    • LIC Housing Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I took my housing loan with LIC HOUSING FINANCE previously, They gave me sufficient loan amount based on the requirement, but i felt they have charged me high rate of interest and even they have charged me processing fee high, so i have done balance transfer to other bank.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Apr 19, 2019
    • Bajaj Finserv Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I did balance transfer from one bank to Bajaj finserv for housing loan, the loan amount was sufficient, but rate of interest i felt was less compare to other bank loan, the rate of interest they have charged me up to 8.85% which was nominal, everything is good but i did not like one thing ,like after doing balance transfer i came to know that it is mandatory to pay insurance for premium it use to get lock after paying insurance, i can not do in future balance transfer .
      Was this review helpful? 2
      , hyderabad
      Reviewed on Apr 19, 2019
    • Indiabulls Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I hold my housing loan with Indiabulls for an while. They have given me loan on time without any delay, their service was good. The process in getting loan was simple, i got loan on time. Their rate of interest was nominal, still this loan is running.
      Was this review helpful? 2
      , new delhi
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      Last 4month back I took one home loan from HDFC Limited , but I am not satisfied with their rate of interest since it is little high , and loan amount is 30L I am satisfied with loan amount and and EMI amount is 25K and tenure is 25years , but their customer service is not much good ,and response not at a time.
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Best service"
      0.5 4.5/5 "Excellent!"
      I hold my housing loan with HDFC LIMITED for an while, their service is good, but not sure about the rate of interest like every 2-3 months they are increasing my limit up to 0.05% i need to check with the customer care regarding this, the loan amount was sufficient, they have not charged me processing fee.
      Was this review helpful? 1
      , bangalore
      Reviewed on Apr 19, 2019
    • IIFL Home Loan
      "NOT SATISFIED"
      0.5 1.0/5 "Really Bad"
      I have previously used the housing loan with the INDIA INFOLINE HOUSING FINANCE LTD and transferred to another bank because the rate of interest was higher. They have offered the pre approved so taken. There are hidden charges applicable also it is floating rate of interest with this bank which was 32% which am not happy.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "GOOD"
      0.5 4.0/5 "Great!"
      The documentation process was easy and simple with the HDFC LIMITED and housing loan was taken before few days. The rate of interest was lesser so transfered the loan with this bank. The duration is for 30 years to repay the loan. There is a pre closure option with this loan.
      Was this review helpful? 2
      , mumbai
      Reviewed on Apr 19, 2019
    • HDFC Limited Home Loan
      "Very good"
      0.5 4.0/5 "Great!"
      I am satisfied with loan amount of 8L with the rate of interest is 8.65% , EMI amount is 6769 rupees and tenure is 20years. It was taken last two years back from HDFC LIMITED and their overall service is good but I would like close this loan after 3 to 4 months.
      Was this review helpful? 2
      , new delhi
      Reviewed on Apr 17, 2019
    • Bank Bazaar Home Loan
      "balance transfer"
      0.5 4.0/5 "Great!"
      i like your offer...t is the first time experience with the Bankbazaar.com and i have a good experience with this channel. I prefer using it through the mobile application as the application is simple and user friendly to access. The customer service is good.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 17, 2019
    • Axis Bank Home Loan
      "Process is good"
      0.5 5.0/5 "Blown Away!"
      My home loan is with Axis Bank and the process to get the loan is good. The disbursement happened on time and the customer support and response is good. The documentation was also a smooth process. The rate of interest and processing charges is normal.
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 17, 2019
    • IDBI Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      I took housing loan with IDBI bank for an while, the loan amount which they have given me was good, it was sufficient based on my requirement, the rate of interest and their processing fee which they have charged me was nominal, AS it is government bank their service is not that up to the mark, but the interest rate was less so i applied.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 17, 2019
    • LIC Housing Home Loan
      "Interest rate should be reduced"
      0.5 4.0/5 "Great!"
      LIC housing is good but interest is the concern, I took the amount Rs. 20 lakhs for 20 years. They quoted 10.8% its a floating one, they didn't revise the interest as per the RBI guideline. But they do have balance transfer, part payment and other options.
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 17, 2019
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