Long-tenure home loans look affordable, but hidden cost could bleed buyers by Rs 30 lakh
Long-tenure home loans may seem affordable with smaller EMIs, but the hidden cost is massive—homebuyers often end up paying nearly double the property’s price. Banks benefit the most from these long repayment periods, while borrowers risk losing lakhs in lifetime interest outgo, experts say.
- Aug 20, 2025,
- Updated Aug 20, 2025 4:26 PM IST
For most Indians, buying a house is the biggest financial decision of their lives. With property prices soaring, a home loan often becomes the only way to own a home. Banks make the deal sound attractive by offering long-tenure loans—sometimes up to 30 years—promising “affordable” EMIs that don’t stretch your monthly budget. But what looks like affordability on the surface often translates into decades of financial bleeding.
The Catch: Small EMIs, Huge Interest
“Banks love long-tenure home loans because they earn far more in interest while keeping your EMI deceptively low,” explains chartered accountant Abhishek Walia. “It feels affordable, but you end up paying almost double the cost of your house.”
Consider this example:
House Price: Rs 50 lakh
Loan Tenure: 25 years
Interest Rate: 8%
EMI: ~Rs 38,500
At first glance, Rs38,500 seems manageable for many middle-class families. But the long-term math is sobering:
Total Interest Paid: ~Rs 65 lakh
Total Cost (House + Interest): Rs 1.15 crore
That’s more than twice the actual price of the property.
Now compare this with a shorter 15-year loan:
EMI: ~Rs 47,800 (slightly higher)
Total Payout: Rs 86 lakh
Savings: Nearly Rs 30 lakh in interest
This shows the fundamental trade-off: banks are selling you “time.” The longer the time you borrow, the more they profit.
Home Loan: Short-Term vs. Long-Term
| Feature | Long-Term Home Loan (25–30 years) | Short-Term Home Loan (10–15 years) |
| Tenure | More than 10 years, up to 30 years | Typically under 10 years |
| EMI | Lower (e.g., ~₹38,500 for 25 years) | Higher (e.g., ~₹47,800 for 15 years) |
| Total Interest Paid | Much higher (~₹65 lakh on ₹50 lakh loan) | Lower (~₹36 lakh on ₹50 lakh loan) |
| Total Payout | ~₹1.15 crore (2x house price) | ~₹86 lakh |
Short-Term vs. Long-Term Loans
Banks offer home loan tenures ranging from 10 to 30 years. Each has its pros and cons:
Long-Term Home Loans
Tenure: More than 10 years, up to 30 years.
EMI: Lower, easier on monthly budgets.
Total Interest: Much higher, leading to significantly higher overall cost.
Best Suited For: Younger borrowers who need lower EMIs initially.
Short-Term Home Loans
Tenure: Typically under 10 years.
EMI: Higher, sometimes stretching monthly income.
Total Interest: Lower, saving lakhs over the life of the loan.
Best Suited For: Those with stable incomes or close to retirement.
According to ICICI Bank's information , short-term loans may carry slightly higher nominal interest rates, but because the repayment period is shorter, the total interest outgo is much lower.
Why banks push long tenures
For banks, longer tenures mean predictable cash flow for decades and higher cumulative interest earnings. By offering a “low EMI,” they make the loan look affordable, while ensuring that the customer pays more than the property’s value over time. In other words, EMIs are marketed as a product—but what the bank is really selling is time at a cost.
Smarter Borrowing
If possible, choose the shortest tenure you can afford—even if the EMI feels a little higher.
Use windfalls like bonuses, increments, or investments to make prepayments, which directly reduce the principal.
Review your loan periodically and consider refinancing if interest rates drop.
Avoid stretching a loan just to lower EMI—think long-term cost, not just monthly comfort.
A home loan is a necessity for many, but tenure choice makes all the difference. Long-tenure loans may seem like a lifeline, but in reality, they are a golden goose for banks and a slow bleed for borrowers. If you can afford to pay more now, keep your tenure short—you’ll thank yourself decades later.
For most Indians, buying a house is the biggest financial decision of their lives. With property prices soaring, a home loan often becomes the only way to own a home. Banks make the deal sound attractive by offering long-tenure loans—sometimes up to 30 years—promising “affordable” EMIs that don’t stretch your monthly budget. But what looks like affordability on the surface often translates into decades of financial bleeding.
The Catch: Small EMIs, Huge Interest
“Banks love long-tenure home loans because they earn far more in interest while keeping your EMI deceptively low,” explains chartered accountant Abhishek Walia. “It feels affordable, but you end up paying almost double the cost of your house.”
Consider this example:
House Price: Rs 50 lakh
Loan Tenure: 25 years
Interest Rate: 8%
EMI: ~Rs 38,500
At first glance, Rs38,500 seems manageable for many middle-class families. But the long-term math is sobering:
Total Interest Paid: ~Rs 65 lakh
Total Cost (House + Interest): Rs 1.15 crore
That’s more than twice the actual price of the property.
Now compare this with a shorter 15-year loan:
EMI: ~Rs 47,800 (slightly higher)
Total Payout: Rs 86 lakh
Savings: Nearly Rs 30 lakh in interest
This shows the fundamental trade-off: banks are selling you “time.” The longer the time you borrow, the more they profit.
Home Loan: Short-Term vs. Long-Term
| Feature | Long-Term Home Loan (25–30 years) | Short-Term Home Loan (10–15 years) |
| Tenure | More than 10 years, up to 30 years | Typically under 10 years |
| EMI | Lower (e.g., ~₹38,500 for 25 years) | Higher (e.g., ~₹47,800 for 15 years) |
| Total Interest Paid | Much higher (~₹65 lakh on ₹50 lakh loan) | Lower (~₹36 lakh on ₹50 lakh loan) |
| Total Payout | ~₹1.15 crore (2x house price) | ~₹86 lakh |
Short-Term vs. Long-Term Loans
Banks offer home loan tenures ranging from 10 to 30 years. Each has its pros and cons:
Long-Term Home Loans
Tenure: More than 10 years, up to 30 years.
EMI: Lower, easier on monthly budgets.
Total Interest: Much higher, leading to significantly higher overall cost.
Best Suited For: Younger borrowers who need lower EMIs initially.
Short-Term Home Loans
Tenure: Typically under 10 years.
EMI: Higher, sometimes stretching monthly income.
Total Interest: Lower, saving lakhs over the life of the loan.
Best Suited For: Those with stable incomes or close to retirement.
According to ICICI Bank's information , short-term loans may carry slightly higher nominal interest rates, but because the repayment period is shorter, the total interest outgo is much lower.
Why banks push long tenures
For banks, longer tenures mean predictable cash flow for decades and higher cumulative interest earnings. By offering a “low EMI,” they make the loan look affordable, while ensuring that the customer pays more than the property’s value over time. In other words, EMIs are marketed as a product—but what the bank is really selling is time at a cost.
Smarter Borrowing
If possible, choose the shortest tenure you can afford—even if the EMI feels a little higher.
Use windfalls like bonuses, increments, or investments to make prepayments, which directly reduce the principal.
Review your loan periodically and consider refinancing if interest rates drop.
Avoid stretching a loan just to lower EMI—think long-term cost, not just monthly comfort.
A home loan is a necessity for many, but tenure choice makes all the difference. Long-tenure loans may seem like a lifeline, but in reality, they are a golden goose for banks and a slow bleed for borrowers. If you can afford to pay more now, keep your tenure short—you’ll thank yourself decades later.