When to go for a 30 year home loan

Home loans are loans that are sanctioned to people by various financial institution or moneylenders, who do not have immediate cash for buying a new property or their dream house, or even for refinancing their existing loan or refurnishing their old house. Home loans used to top the lists every time someone needed to fulfill any of their desires related to their houses. This was very convenient because it provided the borrowers with an option to repay the sum over a large period of time, though the bank used to charge an interest for as long as the money was kept with the borrower. Thirty year home loans have become quite an industry standard nowadays, however it is you who has to decide if it is the right choice for you, too.

Understanding the 30 year home loan period

As already mentioned above, the only advantage of the thirty year old home loan period is the option to pay off the complete loan over a large period of time. Now, thirty years is a long, long time and is sufficient to completely pay off a home loan. However, the rate if interest keeps adding to the principle amount and after the passage of each year, the interest keeps adding to the premium, making the loan amount bigger and bigger. But there is also an advantage when keep paying interests on the loan. All the interests paid are completely tax free and thus it results in a decrease in the after tax cost. Additionally, if you have a regular strong income flowing, you also have the option to pay off the total loan in a period of less than thirty years. Since you have opted for thirty year loan tenure, you are also eligible for applying for a huge loan amount and thus buy the house of your dreams.

When to opt for the thirty year home loan

If your total monthly earnings are sufficient enough to allow you maintain some savings even after you pay your monthly repayments, it is probably a good idea for you to go for the thirty year mortgage. This can be of significant benefit to you if you can find some sort of investment plan that is as long as the loan tenure or maybe more than that. This way, after you have paid off your mortgage, you would still have some money left with you. Another important factor that can be considered here is that how soon you would like to accumulate equity on your home, or if you would like to completely own it. As a matter of fact, the thirty year home loan takes a very long time to build up equity.

The thirty year home loan certainly is a very attractive deal, and most of the prospective buyers go with it because it is probably the longest mortgage that is available as of today. Some experts even say that if people are given an option to extend their loan terms to thirty five or forty years, they would even do that. However, if you are going to apply for a mortgage, keep in mind your monthly finances. Do not over commit yourselves to anything that might become an issue in the future.

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