Marketing strategy of banks
One of the major marketing strategy of banks is to show lower Home Loan interest rates than the prevailing interest rates to attract borrowers to the banks. As you know a home loan is a Major financial commitment for us and it can continue with us for more than 10 years. With every bank of competing each other to add more customers, it is very important for you to understand about it. You should have clear decisions on repayment capacity that type of loan and the rates involved this loan. Selecting the right tenure/duration is a major factor that you should decide before approaching the bank.
If you are taking a loan of rupees 30 lakhs which an interest rate of 11 percentage and with a repayment duration of six years, then year net monthly repayment will come around rupees 57,600. If you had chosen it tenure of 20 years, with the same interest rate of 11 percentage the EMI will get reduced to rupees 31,000.
Opt for a short tenure
It can be better to opt for a short tenure and pay of the commitment towards the home loan as fast as possible but when the tenure is shorter the EMI and goes higher. Many of the borrowers are not able to set aside with such huge amounts to the loan repayment as there may be other commitments also. Short tenure home loans is best for those who can afford a highly repayments towards the home loans. Everyone dreams of a day when his home loan is fully paid and the home becomes completely under his name, without any attachments.
It is always better
If you want to free of the burden of home loan it is always better to go for a short tenure one. Those who cannot afford to set aside the amounts every month to home loan go for a long duration home loan. Select a tenure with no prepayment penalty option. It will ensure that you won't penalise if you prepay the loan.
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