Utility News Desk !!! If you are thinking of taking a home loan, then you have to keep some important things in mind. Because taking a home loan for a long time can harm you. On the other hand, if you take a short-term loan, then you may have to face both advantages and disadvantages. This is because long-term home loans are not necessarily bad. Sometimes only short-term home loans are beneficial for people. Of course, saving on interest costs makes short-term loans better.
If you have a home loan of Rs. 50 lakhs, then you will have to pay this much. The interest is Rs. 41.28 lakhs, but if you decide to repay the same home loan in 25 years, then you will have to pay interest. 75.87 lakhs. Choosing a short-term option helps a lot, but a long-term home loan has its own benefits. Therefore, a long-term home loan can be considered.
According to experts, generally an EMI of up to 40% of monthly income is considered appropriate, but sometimes customers opt for higher EMIs to repay the loan faster. If a family is using a large part of the income to repay the home loan, cash flow problems may arise. In such a situation, if a person loses his job or decides to take a leave or suddenly there is a big expense, then managing the EMI of the house can be a tough task.
In case of a long-term home loan, the EMI is comparatively lesser than the amount payable on a short-term loan. This can provide some relief to the family if there are some cash flow issues. You can repay a 25-year home loan in 15 years, but try to approach your lender to extend your home loan tenure from 15 to 25 years and for this you will have to go through the verification process once again.
If you do not pay the EMI on time, your credit score may be affected. First of all, the customer has to make a plan to repay the home loan. In case of job loss, the lending bank will not give any concession to the borrower on EMI payment. Therefore, most experts recommend maintaining an emergency fund equal to 6 to 12 months of household expenses. Higher EMIs on short-term home loans require a higher emergency fund than long-term home loans.