Tenure Reduction vs. EMI Reduction: Planning for Retirement

In India, the retirement age is a hard stop. Unlike the West where "phased retirement" is common, corporate India often bids goodbye at 58 or 60.

Yet, many people take 20 or 25-year home loans at age 40. Do the math: 40 + 25 = 65.

You are planning to pay EMIs for 5 years after your salary stops. This is a disaster waiting to happen.

The Problem: The Retirement Gap

Carrying a heavy EMI into retirement eats into your corpus (EPF/PPF). Instead of enjoying your sunset years, you are stress-paying the bank.

Most borrowers, when they prepay, ask the bank to "Reduce EMI" to get immediate relief. This is often a mistake for late-career borrowers.

The Agitation: The Interest Compounding

Reducing the EMI keeps the tenure long. It keeps you in debt until age 65.

Reducing the Tenure pulls the finish line closer.

If you prepay ₹2 Lakhs today and choose "Reduce Tenure", you might shave off 2 years of payments. Suddenly, your loan ends at 63 instead of 65.

Do it again next year, and it ends at 61.

The Solution: The "Zero by 58" Goal

Your strategy should be reverse-engineered from your retirement date.

1. Calculate years until retirement (e.g., 10 years).
2. Use AmortiApp to find the exact prepayment needed to make your loan end in 10 years.

Don't just prepay randomly. Prepay with a target date. "I want to be debt-free the day I retire."

📱 The Amorti Simulation

Find your freedom number.

1. Open AmortiApp.
2. Enter your loan details. Note the "Payoff Date" (e.g., Aug 2045).
3. Your retirement is Dec 2035. You need to cut 10 years.
4. Go to "Extra Payments" and play with the numbers.
   • Try: increasing monthly EMI by ₹5,000.
   • Try: a yearly bonus payment of ₹1 Lakh.
5. Adjust until the "Payoff Date" aligns with Dec 2035.

That is your plan. Print it. Stick it on your desk. Follow it.

Align your debt with your life stage.

Calculate My Freedom Date