This is a very important and tricky question that first-time loan customers will face.

It is understandable that one would want to opt for a loan with the longest tenure as that reduces the equal monthly instalment (EMI) and makes it more manageable. But what you don’t understand is that while this is true, you could actually end up paying more interest in the process, thereby driving the cost of your property higher.

So, it is very important that you get your calculations right. If you are taking a long tenure loan during the early stages of your career, then you won’t have any worries as you have a long working life ahead of you and you can easily repay the loan amount in relatively less time with incremental increase in your income every year.

However, if you take a loan in the latter years of your working life, then future income prospects become relatively sleek (vis-à-vis the previous situation) and hence, you have to look for funding within your existing means

Hence, you need to know the impact as well as the degree of impact of your EMI payments on your finances before you finalise a loan tenure. You should also calculate the available surplus under different scenarios and assess the available monthly surplus for each scenario before arriving at a decision.