--- title: "Is It Good to Take a Home Loan for Long-Term?" description: "Are you planning to purchase your dream residence using a home loan?" author: "Pedro Araez" published: 2020-07-28 updated: 2022-11-10 canonical: https://www.mindstick.com/blog/296783/is-it-good-to-take-a-home-loan-for-long-term category: "loan" tags: ["loan", "home loan"] reading_time: 4 minutes --- # Is It Good to Take a Home Loan for Long-Term? Are you planning to purchase your dream residence using a home [loan?](https://www.mindstick.com/tag/blog/loan) Well, then you must have come across the dilemma of which is better – a shorter tenure or a long one. First-time homeowners are often baffled with such [questions](https://www.mindstick.com/blog/124895/hp-hpe0-s54-cheat-sheet-exam-questions-bank-for-guaranteed-success) and wear themselves out in search of the right answers. However, this guide will help you decide whether you should go for a short-term housing loan or a long-term one. #### Short vs. Long Home Loan Tenure: The Debate Is there a clear winner? Let’s find out by comparing these two with the help of following parameters. #### • Home loan eligibility Your monthly repayment capacity greatly influences [home loan](https://answers.mindstick.com/qa/38128/name-the-reserve-bank-of-india-appointed-committee-which-recommended-linking-home-loan-rates-to-the-rbi-s-repo-rate) eligibility; this, in turn, boils down to your disposable income. Hence, assuming all other things remain equal, your monthly home loan EMI will be higher if you opt for a short tenure, and will decrease as the tenure increases. That means, choosing a longer housing loan tenure will allow you to borrow a higher principal amount as compared to a shorter tenure. Pro Tip – Before applying for home loans, check your eligibility using an online home loan [calculator](https://www.mindstick.com/articles/38/calculator-in-asp-dot-net-using-javascript) such as the home loan eligibility calculator. #### • Home loan EMIs At a fixed rate of interest, the EMI you need to pay for the repayment of your housing loan will keep decreasing with an increase in tenure. For example, if you take a home loan online for Rs. 50 lakhs at 10%, this is how the EMI will change in the following manner – • Tenure = 15 years, EMI will be Rs. 53,730 • Tenure = 20 years, EMI will be Rs. 48,251 • Tenure = 25 years, EMI will be Rs. 45,435 • Tenure = 30 years, EMI will be Rs. 43,879 Use an online home loan EMI calculator to know your EMIs in advance. #### • Total interest outgo Assuming the home loan rates and other factors remain constant, the interest outgo is greater for a longer home loan tenure. For example – Consider you take a housing loan of Rs. 40 lakhs at the rate of 10% for 15 years, the interest payable on the loan will be Rs. 41,10,873. The same will be Rs. 57,90,629 for a tenure of 20 years, and it increases further to Rs. 75,94,850 for a tenure of 25 years. Hence, a longer tenure may come in the way of other [financial](https://yourviews.mindstick.com/audio/1154/what-is-financial-modelling-course-fmvc) [objectives](https://www.mindstick.com/articles/95820/understanding-of-speaking-skills-and-forms-platforms-objectives-and-examples) you may have in mind. #### • Income tax benefits Sections 24B and 80C of the ITA allow tax benefits on the home loan interest and principal amount (only up to a specified limit of Rs. 1.5 lakhs) respectively. However, for a shorter home loan tenure, the principal portion will be significantly higher in the EMIs, thus, restricting the amount you can claim for deduction under Section 80C. Moreover, the [effective home](https://www.mindstick.com/articles/43863/effective-home-remedies-for-hair-problems) loan [interest rate](https://answers.mindstick.com/qa/38471/what-is-the-new-interest-rate-approved-by-the-union-government-on-the-employee-provident-fund-epf-for-the-year-2015-16) after availing tax benefits is better than other [investment](https://www.mindstick.com/articles/13065/an-investment-in-certification-software-gives-peace) avenues and hence, must be availed for a longer period. As far as the debate of which is better, short or long tenure - there is no clear winner. It all comes down to your unique preferences and requirements. How? If you’re planning on buying a house that is bigger and more expensive, you can apply for home loan with a longer tenure. Similarly, if you wish to [reduce your](https://yourviews.mindstick.com/story/4476/9-tips-to-reduce-your-metabolism) monthly outflow, choose a longer tenure. But, if you want to close your loan sooner and avoid higher interest outgo, opt for a shorter tenure. Want to avail easy home loans? Make sure you know the ins and outs of it – use an EMI calculator for home loan and adjust the tenure and choose the one you are most comfortable with, in terms of affordability and interest outgo. --- Original Source: https://www.mindstick.com/blog/296783/is-it-good-to-take-a-home-loan-for-long-term Copyright © MindStick Software Pvt. Ltd. This Markdown version is provided for developers, AI systems, and offline reading.