Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Lower EMIs Come at a Cost. Do you Know it?

Loan for Home

Lower EMIs Come at a Cost. Do you Know it?

Lower EMIs Come at a Cost. Do you Know it?

You might think that there is something wrong here. How come we are telling you that lower EMIs are something to be careful of? Isn’t it?

But in general, you need to be careful when you borrow. And more so when your EMIs are lower. It’s possible that you are missing out something important.

So what is it that is so important?

Let’s take a small example to help you understand it.

Suppose you purchase a house that costs a total of Rs 40 lacs. Of this, the lender will only give you loan for 80% of the cost and rest has to be provided by you as downpayment. So the loan you will get is about Rs 32 lacs.

Now the interest rate being charged is 9%.

Since you prefer low EMIs, your lender has told you that you can opt for a very long tenure loan and it will reduce the EMI. So you have decided to go in for 25-year tenure.

So for 25-year tenor, your home loan EMI is Rs 26,854.

Additional Read: Top 5 factors that affect your home loan EMI

But let’s see what you EMI would have been, if you had taken a loan for shorter tenure. Calculations show that EMIs will be as follows:

  • EMI for 20 years – Rs 28,791
  • EMI for 15 years – Rs 32,457 

That was about EMIs. But what about the total home loan interest rates that you have to pay over the loan tenure?

The answer is given below and its shocking:

  • Total Interest Paid for 25 years – Rs 48 lacs
  • Total Interest Paid for 20 years – Rs 37 lacs
  • Total Interest Paid for 15 years – Rs 26 lacs

Additional Read: How to Plan the Right Budget When You Buy a New Home?

No doubt taking a long tenure loan means lower EMIs (as in case of 25-year loan). But have a look at the extra interest you are paying! Its almost Rs 11 lacs more than what you pay in 20-year loan and Rs 22 lac more in case of 15 year loan.

This is the reason why its said that lower EMIs come at a cost. And the cost is huge.

Apply For Home Loan

Say Hello to Your New Home with Our Easy Home Loans!

Apply now
Popular Searches
anyror modt charges 712 utara online gujarat pre emi calculator earnest money deposit Goa Land Record earnest money khasra number meebhoomi Assam Land Record
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Useful Links and Resources

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.