Owning a home is the ultimate dream for many and Home Loan undoubtedly helps in achieving it. But people should not just blindly pay their monthly instalments while paying back the loan. It is advised to adopt ways to save as much as you can on your interest payments. And one way to do this is to always consider the length of the loan tenure while Calculating the Home Loan EMI. Because just knowing how to change your Home Loan tenure can work wonders for your savings on interest.

What is Home Loan Tenure?

Loan tenure refers to the time taken by the borrower to repay the loan along with the interest. Loan tenure is decided based on factors like age and income of the borrower, and also the remaining length of the borrower’s career. These factors are instrumental in deciding one’s capacity to take the weight of the loan. The purpose behind the purchase of the house is also a deciding factor in determining the length of the tenure.

Let’s see how switching your Home Loan tenure can save you lakhs on your interest payments.

How to Reduce Home Loan Tenure?

When Home Loan interest rate comes down, reducing the loan EMI seems to be the optimal solution, as it will save on your monthly payments to the bank. Though reducing EMI may lead you to save more on your monthly payments, there are other ways to save more on your overall interest payment. Here are some Home Loan tenure tips to help you manage Home Loan tenure better.


If you get a salary hike or a bonus, you can use this amount to prepay all or part of the loan. Prepaying will bring down the principal amount, hence reducing the loan tenure and the total interest payable. One such Home Loan scheme proposed by Bajaj Finserv offers incentives like part prepayment and nil foreclosure charges.

for more details read: Comprehensive Guide to Reducing Home Loan Tenure

Increase Your EMI

Increase the EMI, if affordable, to reduce your loan tenure. This will therefore reduce the overall interest paid on the loan. Changing the tenure would lead you to save more on your interest payments. This is more tax-effective as the interest saved is not taxable, while the income is.

Here’s how reducing your tenure will work out when your bank brings down the interest rates. If, let’s say, you have taken a loan of Rs 50 lakh at an interest rate of 10% for 15 years, then the EMI would be Rs 53,730. Now, if the interest rate falls down to 8% at the end of the third year, the revised EMI would be Rs 48,667 with an outstanding principal of Rs 45 lakh for 12 yrs. Hence, the interest rate cutback saves an amount of Rs 5,063 per month on interest.

Now, the procedure to reduce Home Loan tenure is to continue with your previous EMI of Rs 53,730. This will lead to winding up the loan in 10 years and 3 months, instead of 12 years. Hence, you will save an interest payment for 21 months, which amounts to approximately Rs 4.10 lakh.

If you are applying for a Home Loan then consider factors like ease of approval and repayment and duration of grace period before zeroing in on one. Bajaj Finserv offers 5 minute approval facility on online applications.

Apply for Home Loan Online Check your Home Loan Eligibility