Why You Should Keep The Loan Re-Payment Term Short
Home loans are either seen as a long term expense or an investment, depending on which side of the money fence you are on. Some have no option but to take a loan to buy a home, others do it simply to save income tax and build an asset. However, we still suggest you keep the loan repayment tenure as short as possible. Why stretch it for 30 years if you can somehow manage to recede it to, say, 25? While the equated monthly installment (EMI) amount would be much less in a 30-year tenure than that of a 25-year tenure, you can't turn your eyes away from the benefits of a shorter loan tenure.
- You are getting tax savings on the home loan interest you pay. But, is it worth staying under debt for a longer period? What if you need to take another loan for you children's wedding in future? At the time of taking the loan, you are a young man. As you grow old, repaying the home loan would not be your only priority. Also, why not finish this one off and buy another home? Do you not want to get a better return on your investment?
- As long as you have to pay monthly EMIs, you are under tremendous emotional pressure, too. Unlike people in the West where entire economies are credit-based and people do not perceive debts as such a burden, Indians do not take it lightly. If under debt, many of us would start greying prematurely or losing hair over it. We will also try not to take any kind risks, even if they are expected to yield positive results because we are under debt.
- The sooner you get rid of the debt burden, the better for the well-being of your family. How so? In case you are not able to pay your EMIs, your spouse or other family members will be liable to do so. This could cause them a lot of financial trouble.