How to Determine the Ideal Tenure of Your Mortgage Loan

While looking for the best offer on a mortgage loan, most people tend to choose the lender who is offering the lowest interest rate. While interest is an essential factor, not many people understand the importance of loan tenure. Read on to know more about how to determine the right tenure for a mortgage loan.

If you are looking to avail a mortgage loan, you may probably shortlist the lender with the lowest rate of interest. But, have you thought about the duration of the loan? Apart from the interest rate, tenure is a crucial variable of the loan that affects the repayment.

Typically, the shorter the loan duration, the higher is the EMI and vice-versa. If you have opted for a loan for a shorter duration, a major chunk of the EMI is used towards the repayment of the principal amount than the interest component. Whereas, if the loan duration is longer than 15 years, a significant part of EMI is used towards interest payment than the principal amount.

. So, what is the right tenure for a mortgage loan? Here are some critical factors you must consider before you decide.


When you are availing a loan, age is a crucial factor. The lenders consider the age of the applicant to determine the maximum loan amount. As a borrower, you would not want to bear the burden of a loan after you retire. So, if your retirement is just around the corner, it is advisable to apply for a loan for a shorter duration so that you can repay the loan before you retire. However, if you are a youngster and just starting your career, you can apply for a loan with a longer duration. You have the leverage of time, and as your income increases over time, you can increase the EMI payout.

Current and Future Financial Status

Your current income is an essential factor that you must consider while deciding the loan tenure. So, if your current income status is low, you must opt for a longer duration loan. This will help you manage the EMI payout better, and your immediate burden of repaying the loan will be low. If you have a higher disposable income, you can opt for a shorter loan based on your repayment capacity. Also, if you are expecting a raise in pay or if you foresee any additional expenses in the near future, you must consider these factors while deciding the loan tenure.

Loan Amount

The amount you wish to borrow is a vital factor that you must take note of while deciding the loan duration. If you are borrowing a small amount, say five lakhs or less, it is best to opt for a shorter-duration loan. If you want to borrow a large sum, you must apply for a longer tenure loan as it would be easier for you to repay the same in smaller EMIs.

Purpose of the loan

Another essential factor to consider while deciding the loan tenure is the purpose of the loan. If you wish to avail a loan to purchase a property for self-use, you can opt for a long duration loan. But, if you want to borrow to buy a property for investment, you must go for a shorter-duration loan.