Loan Tenure 101

In an ideal world, everyone would have enough money for all their needs. But in reality, many of us must borrow to achieve our goals.

Banks and financial institutions provide tons of loan tenure options. Unfortunately, this can be very confusing for borrowers, especially beginners. That’s why it’s crucial to understand what loan tenure in Singapore is, and how it directly affects your financial situation. This way, you can repay your loan with ease.

Here at OMY, you will discover the following:

What Is Loan Tenure In Singapore?

Loan tenure refers to the time period for which a borrower is required to repay the borrowed amount along with the interest to the loan provider. It is a non-negotiable factor to consider when applying for a loan since it decides the amount of monthly instalments you will have to pay towards the loan.

Short-Term Vs. Long-Term Loans

A loan tenure can be broadly categorised into two categories- short-term and long-term loans.

A short-term loan typically has a tenure of up to one year and is usually offered for certain loans such as payday loans. This loan tenure is ideal for borrowers who need quick access to limited cash and can repay it within a short time frame.

On the other hand, a long-term loan has a loan tenure of more than one year. Loan tenure options can range from five to 35 years, and are generally offered for home loans, car loans, and the like. Because these loans are more expensive, borrowers need a longer repayment period to pay it back without striating their budget.

It’s essential to note that despite the more affordable monthly payments, opting for a longer loan tenure can result in higher interest rates and overall repayment costs. Therefore, it’s crucial to assess your financial situation before selecting a loan tenure.

What Are The Different Factors That Affect Loan Tenure?

Take a look at the following factors that greatly affect your loan tenure:

Loan amount

Generally, the higher the loan amount, the more extended the loan tenure. Paying back a big loan in less than a year will be tough on your budget so to make payments manageable, you need a longer loan tenure. Meanwhile, borrowing a small amount is easier to handle which means you can pay it off faster with a shorter loan tenure.

Age of borrower

Banks and financial institutions prefer younger borrowers as they have a longer earning capacity and can repay the loan over a more extended period. Therefore, if you’re older, you may be offered a shorter loan tenure, which will result in higher monthly instalments.

Income and Debt-to-Income Ratio

Your debt-to-income ratio is the comparison between how much you earn vs. how much you owe (credit card bills and other loans). If you are taking on a lot of debt compared to your income, a longer loan tenure will be better even if it means paying more interest over time. But if you have a higher income and low debt, it will be easier for you to pay back the loan with a shorter loan tenure since you have more money coming in.

Loan type

Different loan types have varying loan tenure options. For instance, a personal loan typically has a shorter loan tenure of up to 5 years because it is usually a smaller loan amount. Meanwhile, a home loan can have a longer repayment period of up to 30 to 35 years due to the larger loan amount.

Credit score

Your credit score is essentially like a report card that shows how trustworthy you are at managing your previous debts. A good credit score will signal lenders that you are responsible with your money so no matter what loan tenure in Singapore you choose, banks and financial institutions are more likely to approve your loan.

What To Consider While Selecting A Personal Loan Tenure In Singapore

We’ve rounded up the following factors that you should consider while selecting a personal loan tenure.

Monthly income

Before you apply for any loan, assess your monthly income and expenses. This will help you determine the amount of money you can comfortably set aside for loan repayment. Doing this step will also help you select the best loan tenure that allows you to meet your monthly repayment obligations without compromising your daily needs.

Existing obligations

If you’re looking to save money in the long run, opting for a shorter loan tenure may be the way to go. While this loan tenure may result in higher monthly instalments, it will help you repay the loan faster and save on interest rates.

Interest rate

Ultimately, these two are two sides of the same coin. If your loan has a higher effective interest rate, it makes more sense to go for a shorter loan tenure in Singapore so the interest won’t have time to pile up. On the contrary, a longer tenure may work best for low-interest loans since the extra cost you take on is lower. Spreading your payments over time can make it more affordable.

Loan amount

If you take out a loan with a high amount, you may want to consider a longer loan tenure to reduce the monthly repayment amount. However, keep in mind that a longer loan tenure means you’ll be paying more interest over time. It’s all about finding the balance between the two.

Future financial prospects

Whether you’re still employed, own a business, or plan to start a new venture, your future financial prospects can greatly impact your loan tenure decision. If you anticipate a significant increase in your income soon, opt for a shorter loan tenure to repay your loan faster.

However, if you anticipate any financial uncertainties, it may be wise to choose a longer loan tenure to ensure that you can meet your monthly repayment obligations without stress.


Still have questions about loan tenure in Singapore? We’ll answer them below.

What is the maximum loan tenure?

In Singapore, the maximum loan tenure varies depending on the type of loan. For personal loans, the maximum tenure is typically up to 5 years, while for home loans, it can be up to 30 years.

Is bank tenure long?

Banks usually offer a longer loan tenure compared to financial institutions.

Can I change my loan tenure after I've taken out a loan?

Yes, it is possible to change your loan tenure in Singapore after you've taken out a loan. However, changing your loan tenure will depend on your loan provider's policies and terms and conditions. Expect fees involved in changing your loan tenure.

How do I find out the tenure of a loan?

The loan agreement should clearly state the loan tenure, including the start and end date of the loan repayment period. If you're unsure about the loan tenure, it's best to speak to the bank directly to get more information.

Can I get a 35-year mortgage in Singapore?

Generally, home loans in Singapore can have a repayment period of up to 30 years, but some banks may offer loans with a longer tenure of up to 35 years or until the borrower reaches the age of 75, whichever comes first.

Is 50 too old for a 30-year mortgage?

It's best to speak to a financial advisor or lender to assess your individual situation. While age can impact loan tenure, it's not necessarily the only determining factor. If you have a stable income, a good credit score, and you've developed a good relationship with your bank, you may still be able to secure a 30-year loan tenure.

Is there an age limit for a loan?

Banks may have their own policies and criteria for determining a borrower's eligibility based on age. Generally, borrowers who are above the age of 18 or 21 and below 70 or 75 are considered eligible for loans.

Is short tenure best for savings?

While a short loan tenure can help you save money on interest rates in the long run, it may not necessarily be the best option for savings.

Shorter loan tenures typically result in higher monthly instalments, which can be difficult to manage if you have other financial obligations.

On the other hand, longer loan tenures can provide more flexibility in your budget, allowing you to set aside more money for your expenses. The best loan tenure for savings will depend on your individual financial situation and priorities.

Head over to this page if you’re ready to get your personal loan.

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