Know the Factors that Impact Your Home Loan Duration
Jun 12, 2018 Home Loan
It is always said that longer home loan tenure is better as it enhances your home loan eligibility, lower EMIs as well as flexibility to prepay the home loan partly or fully.
Most home loans, by default, have a high tenure of about 20 to 25 years and in some cases, the tenure goes even up to 30 years. The tenure of a home loan depends on various factors, which you should be aware of before you approach the lender for your loan.
Most home loans, by default, have a high tenure of about 20 to 25 years and in some cases, the tenure goes even up to 30 years. The tenure of a home loan depends on various factors, which you should be aware of before you approach the lender for your loan.
Age of the borrower and source of income
Banks offer home loans on the basis of borrower’s capability to repay the loan which in turn is determined by borrower’s income. Your income also determines the overall home loan amount eligibility which further depends on your age and retirement age. In case of salaried individuals, generally the retirement age is considered to be 60 years and thus the tenure of the home loan will be equal to the remaining years of your service. If you are a self employed person then lenders consider 65 as the retirement age. A person who is near to the retirement age is usually not eligible for a home loan unless they have another regular source of income.
Age of the property
One of the crucial aspects which determine your home loan eligibility is the age of the property. The age of the property is not standard, it depends from one building to another based on the construction material, property location and other factors. Such as the properties located near the sea have a lower residual life due to erosion caused by salty sea breeze as compared to the properties situated in other locations. The property is pledged as the security for the home loan, hence the lender will not offer a home loan for a duration that is longer than the life of the property which is usually determined by an architect or a civil engineer who conducts a physical survey of the property. If the home loan tenure is longer than the life of the property then there is a risk of losing the property in case the property gets destroyed. This is why financers don't finance old and decaying properties.
Leasehold properties
If a property is built on a leasehold land than the home loan tenure is not higher than the balance tenure of the lease even if the property is in a good condition as the lenders are usually not willing to risk the possibility of the leas not getting renewed. However such cases are rare as land leases are meant for a fairly long period of time. This situation may arise if the lease period of the land is coming to an end shortly.
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