Home Loan EMI: Those who take home loans for a long time should know this, otherwise there will be a problem..
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 cause you loss. On the other hand, if you take a loan for a short time, then you may have to face both advantages and disadvantages.
This is because long-term home loans don't need to be bad. Many times, short-term home loans are beneficial for people. Of course, saving on interest costs makes short-term loans better.
If you decide to repay a home loan of Rs 50 lakh at a 9 percent interest rate in 15 years, then you pay Rs 41.28 lakh as interest, but if you decide to repay the same home loan in 25 years, then you have to pay interest of Rs 75.87 lakh. Choosing a short-term option helps a lot, but long-term home loans have their advantages. This is why long-term home loans can be considered.
40% EMI of monthly income is reasonable-
According to experts, generally, an EMI of up to 40% of monthly income is considered reasonable, but sometimes customers opt for a higher EMI to repay the loan faster. If a family is using a large part of the income to repay the home loan, then cash flow problems can arise. In such a situation, if someone loses their job or decides to take a leave or suddenly there is some big expense, then managing the EMI of the house can be a tough task.
On the other hand, in the case of long-term home loans, the EMI is relatively less than the amount payable on a short-term loan. If there are some cash flow problems, then this can provide some breathing space for the family. You can prepay a 25-year home loan in 15 years but try to contact your lender to extend the tenure of your home loan from 15 to 25 years, and for this, you will have to go through the verification process once again.
Emergency Fund-
Not paying EMI on time can affect your credit score. First of all, the customer needs 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 insist on maintaining an emergency fund equal to 6 to 12 months of household expenses. Higher EMIs on short-term home loans require a higher emergency corpus compared to long-term home loans.
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