Real Estate

How To Choose A Mortgage Term That Fits In Your Plan

home mortgage plan
Written by Shiyamala

Are you planning to buy a house? If the answer is a yes, then choosing the right mortgage term that fits within your plans might be the biggest challenge lying in front of you. So, how do you do it?

To help you in this task, we are here with some words of wisdom from the experts. Without wasting any time, let us check how to choose a mortgage term that’s perfect for you –

Total payment vs. Monthly payment

One of the first things you need to be wary of here is the tenure for the mortgage. Shorter term for the mortgage means you might have to pay a higher EMI, but you will end up paying a lot lesser in total.

Suppose you mortgage a house of $200,000 at 4% for a period of 30 years. And, someone else chooses to purchase a similar building at 3% for a term of 15 years.

The monthly payment for both of you would be $955 and $1381 resp. you might think that you are paying a lot less. However, if you look at the total amount paid, it would come out to be $343,739 for you and $248,609 for the other person.

This brings the difference of $95,130 in the total amount paid. You can decide for yourself – which one is a better! Whether you would want a lower EMI or a lower total amount for the property?

Compare and then choose

Once you have decided on the term for your loan, the next thing left for you to do is to compare the options available in the market. You might find lenders offering standard loan terms and alternative loan terms, with lower interest rates.

Before you get attracted by the lower interest rates don’t forget to check the amount you will be paying for opting for a specialized loan term.

A key thing to remember here is – shorter the loan term, faster you begin paying the principal amount and vice versa. Therefore, compare the terms with the help of an Amortization table to see the difference you will be paying at various points in the loan term that you intend to choose.


With these simple and easy to remember things in the back of mind, you (or anyone for that matter), can easily choose a mortgage term that fits in their financial plans. If you have been struggling to find the right mortgage term for you, implementing the advice shared here is surely going to help.

Give it a try and see how it works for you!

Leave a Comment