banner banner

Stay Up-to-Date with Our Blogs & Articles

The texts on this website have been translated using an automated translation tool and its accuracy cannot be guaranteed. We recommend referring to the English version of the content for the most precise information. In the event of any disputes or inconsistencies, the contents in the English language shall be considered final and binding. IIFL HFL disclaims any liability or responsibility in this matter.
Go Back to Main blog page

Higher EMIs Vs Longer Tenures: A Guide For Home Loan Borrowers

By IIFL Home Loans | Published On Jul 14 2023 7:06 PM 1 min read 85 views 356 Likes
Share on
banner

In the realm of personal finance, one of the most important decisions you face is managing your home loan. If you are a new homeowner, striking a balance between the monthly EMIs and the loan tenure may seem like a task. The question arises: should you increase your home loan EMI or opt for an extended tenure? While both options have their merits, this discussion aims to shed light on the positive aspects of increasing home loan EMIs or extending the tenure, empowering you to make informed choices and maximize your financial well-being.

Fortunately for you, there are financial institutions like IIFL Home Loans that offer affordable financing through flexible tenures and easy EMIs. You may also want to explore our home loan balance transfer facility to transfer your existing home loan to a new account at lower interest rates.

Now back to the main objective here, let’s deliberate what your best option is to deal with the increase in home loan interest rates.

What Should You, as a Borrower, Do?

Here are a few considerations to help you decide the best solution for a home loan rate increase:

A Combination of Prepayment and Increased EMIs

If you have the financial means, consider prepaying a certain percentage of the outstanding loan amount. Doing so early on in your home loan schedule, when the interest charged tends to be higher, could reduce your outstanding balance.

Combined with the regular monthly EMI payments, you should be able to repay your loan without significant changes in the tenure.

Another way to stick to the original timeline could be to increase your EMIs by a certain amount every year (say 5%) along with the yearly prepayment. With this, you may potentially even reduce the loan tenure. An home loan EMI calculator can clarify how your EMI will change with home loan rate increases.

Did you know that even a yearly 5% increase in EMIs can reduce your loan tenure by up to 9 years?! This should substantially reduce your interest outgo by the end of the repayment tenure.

.in/files/

Check out flexible payment options at IIFL Home Loans.

However, this option may not be feasible for those facing a money crunch. In that case, here’s what you can do to keep up with changes in home loan interest rates.

Balance Transfer to Increase the Loan Tenure

Home loan balance transfer allows you to reduce your EMI burden through lower interest rates than what your current lender is charging you. IIFL Home Loans offers this facility with flexible tenure options (up to 20 years), quick loan approvals, and reduced EMIs against a good credit profile.

It is recommended that you research the company’s affordable housing finance options and compare all the benefits and features you can enjoy.

While increasing the loan tenure may reduce the burden of high EMIs every month, you end up paying higher interest in the longer term. Ultimately, whether you choose to increase your home loan EMI or extend the tenure, the goal is to achieve greater financial stability and the peace of mind that comes with owning your own home.

Bottom line

If you plan to increase your tenure through a balance transfer, use a home loan calculator to see how much interest is charged on home loans. You should not risk creating a bigger burden at the cost of saving some money today.

Consider dipping into a portion of your savings instead to prepay a certain amount of the outstanding loan. Increasing home loan EMIs should be your priority if you have the means. If not, carefully increase the tenure by factoring in your annual income, other financial obligations, and the retirement age.

Explore more about different housing finance options at IIFL Home Loans to get better deals and enjoy increased savings.

FAQs

1. How to choose a home loan tenure that fits your budget?

Factor in the following things:

  • Your income and expenses

  • Long-term retirement and financial goals

  • Understand fixed-rate home loans and floating-interest-rate home loans

  • Compare different lenders and their offerings

2. Can I transfer my home loan from one lender to another?

Yes, you have the option to transfer your loan from one lender to another, which is known as a balance transfer. It is typically done to avail better interest rates, improved terms, or superior customer service. However, certain charges or fees may be applicable for the transfer process, and it's recommended to compare the costs and benefits before making a decision. To know more about this service, read more at Balance Transfer with IIFL Home Loans.

3. How can home loan borrowers reduce their debt?

Prepaying a small portion of the outstanding home loan every year can significantly reduce the burden on borrowers. Further, a balanced allocation of assets to take care of other financial obligations can help alleviate debts. Small increases in EMIs, depending on one’s annual savings and bonuses, can help cover debts faster.

4. Does reduced loan tenure mean an increase in EMIs?

If you increase the EMI, you can repay your loan faster, meaning reduced tenure. Whereas if you stretch your loan tenure, your monthly EMIs reduce.

Share on

Tags

apply loan

Quick and Hassle Free Loan Processing

green ad
Prelude to Building Green - IIFL Home Loan's Guide to Sustainable Affordable Housing
Download report

Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.