20 vs 25 vs 30 year home loan: the comparison that includes a rate rise
A longer tenure lowers the EMI and raises the interest you pay. What the usual comparison leaves out is how each tenure behaves when the rate rises. The table shows, for one loan amount and rate, the EMI and total interest for four tenures, and what a rate rise does to each.
Same loan, four tenures
| Tenure | EMI | Total interest | If the rate rises, EMI unchanged | If it rises, keep the tenure: EMI rises by |
|---|
Constant-rate comparison with a one-time stress at the start. Real rises arrive at reset dates, and the rate can fall as well as rise.
What to notice
- The EMI saving from 20 to 30 years is small. The extra interest is large.
- On a longer tenure, a rate rise adds more months, because the EMI barely covers the interest.
- The loan with the highest EMI is the least affected by a rate rise in months, but the most affected in rupees per month.
Which tenure suits you depends on your income, your other goals and whether you can part-pay later. This page shows what each does; it does not pick one.
Questions
Is a 30 year home loan worse than a 20 year loan?
It has a lower EMI and much higher total interest. It also adds more months when the rate rises. Which is better depends on your cash flow and whether you will part-pay; the table shows the numbers for your loan.
How much does the EMI fall when I extend the tenure?
Less than most people expect. At 8.15% on Rs 50 lakh, moving from 20 to 30 years lowers the EMI by roughly Rs 5,000 a month but adds about Rs 32 lakh of interest.
Can I change my tenure later?
Usually, by part-paying or asking the lender to change the EMI. The terms are your lender's; ask in writing.