Save Money and Time; Why A 20-Year Home Loan Could Be A Better Choice For Your Dream Home

Owning a home is one of the biggest dreams for many individuals and a great financial goal. However, purchasing a home often requires a huge amount of money in today's inflationary economy which is beyond the reach of most people. This is where home loans come in. Home loans enable individuals to realize their dreams of homeownership by providing financial assistance. Both private and public banks in India have been offering home loans to help a lot of people. And these loans are typically repaid through monthly installments, or EMIs (Equated Monthly Installments). These loans are mostly very amount and takes a lot of time to be repaid a huge amount of interest is this generated over the teh amount that has been lended. The total amount repaid includes both the principal amount borrowed and a significant amount of interest over time.

Major advantage of getting a Home Loan:

The main benefit of a home loan is the ability to own a property that you may not be able to afford outright. By borrowing the money from Banks or NBFCs, you can purchase a home and repay the amount later making homeownership even easier.Home loans also offer flexible repayment terms, which allows the borrowers to choose a loan duration that suits their financial situation. Typically, the loan tenure can range from 10 to 30 years, depending on the lender. Additionally, home loan borrowers in India can enjoy tax benefits under Indian tax laws. The principal repayment is eligible for a deduction under Section 80C, while the interest paid on the loan qualifies for deductions under Section 24(b), providing substantial tax savings throughout the loan tenure.

EMI Breakdown for Rs 50 Lakh Home Loan: Comparing 25-Year vs. 20-Year Tenure

As per report from Zee Business, For a Rs 50 lakh loan with a 25-year tenure at an interest rate of 9.50%, the estimated monthly EMI would be approximately Rs 43,685. Over the 25-year period, the total interest paid would amount to around Rs 81,05,450, making the total repayment amount (including both principal and interest) approximately Rs 1,31,05,450.

For a Rs 50 lakh loan with a 20-year tenure at an interest rate of 9.50%, the estimated monthly EMI will be about Rs 46,607. Over the 20-year period, the total interest paid will amount to approximately Rs 61,85,574, and the total repayment amount (including both principal and interest) will be around Rs 1,11,85,574

The main difference between a 25-year and a 20-year loan is the EMI amount and the total interest paid. While the EMI for a 20-year loan is higher, it helps save a substantial amount on interest payments due to the shorter tenure. By opting for a 20-year loan instead of a 25-year loan, you can save approximately Rs 19,19,876 in interest payments. Additionally, reducing the loan tenure by five years means you will finish repaying the loan five years earlier, allowing you to achieve financial freedom sooner.