Choosing a home loan is a big step in everybody’s life. While most of us are concentrating only on getting our interest rates lowered, thinking that it is the only major factor in the amount you will be paying towards your emi. Well, your interest rate does make a difference in the amount you pay, but so does the tenure you choose for your loan. It may be surprising to know that your tenure actually makes a difference in your spending, yet it is a fact.
Want to know how it makes a difference?
Let us assume that for a home loan of 30 lakhs at an interest rate of 10.5% for duration of 20 years, you will be paying an interest of 41, 88,335. And if you choose a tenure of 15 years for the same loan amount and interest rate of say 11%, the interest you will be paying is 31, 37,623.
Finally, you would be paying an extra sum of 1050712. You can be sure which option you would be choosing, right?
Now, you can see for yourself, how much of a difference it makes. Don’t go by what is commonly said – it is not only the interest rate that matters.
Just think, having a lower interest rate for longer duration doesn’t mean you will end up paying less.
See for yourself how choosing different tenures will help you save.