Purchasing a house is among the most treasured aspirations for all. However, since owning a property calls for a significant investment, one might face difficulty buying with their own money due to a lack of finance. Hence, one might be forced to take up loans to finance the housing. But the loan amount is generally quite hefty, so applying for one necessitates a lot of consideration. 

Apart from that, one has to select the loan’s duration and the appropriate payback time for oneself. The maximum term for the loan would depend on the property you are investing in. The tenure can range from a shorter period of around five years to even as long as 30 years. Most people opt for lengthier terms rather than shorter periods to keep a low EMI.

However, there are much more aspects surrounding home loans that you must be familiar with. Refer to our informative guide comprising three critical factors to decide your loan tenure.

The loan amount

If you are searching for a home loan in India, you must know that the loan amount can significantly impact the length of the house loan. If the amount borrowed is substantial and way more than what you earn, you must choose an extended term to give yourself more time to repay the debt. 

But if the loan amount is not high and can be paid quickly with your monthly income in less time, you should go for a shorter term. A longer-term would result in higher interest costs as well. The loan tenure is entirely situational and is determined by the amount of money you have borrowed as a loan. It would help if you chose a feasible plan with your earnings.

Interest rate

Home loan interest rates in India are computed annually; hence the rates increase as the term extends. A higher rate of interest in a long tenure raises the cost of credit, while a lower rate of interest on a shorter duration lowers it. Hence to keep interest costs down, it is also preferable to choose shorter terms.

Starting with a longer-term and then settling the loan in the total amount a few years before the ending date might be an excellent option to keep the interest rate low. However, this is only advisable for people who can afford to pay the amount quickly. Home loan interest rates in India vary greatly, and you must choose the most beneficial option for you.

Age of the borrower

The most crucial factor to consider while choosing a tenure is that it correlates to your age. You can select a longer-term if you are young. Considering monthly expenses and liabilities, choosing a longer tenure and low EMIs may be advantageous. But those who are financially secure and can afford hefty EMIs, it is always better to choose a shorter term to save up some money on interest.

Choosing a shorter tenure for older people or those nearing retirement is usually preferable to prevent rejections. Interest rates differ with the term as well.


If you contemplate taking a home loan in India, you should choose your loan tenure wisely. The three factors mentioned in the article impact the term considerably; hence you must consider these before finalizing your home loan.

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