Is a 30-year KPR instalment really more advantageous?

Jakarta — Kompas.com

Owning a home through the Mortgage Ownership Credit (KPR) has become a popular option for many as property prices continue to rise. Recently, however, the idea of extending the KPR tenor to 30 years is being considered by the Government as a means to improve the affordability of housing finance. A long-tenor scheme is not new in housing finance. In several countries, loan terms can reach 35 to 40 years. But the question remains: are 30-year KPR instalments truly advantageous for homebuyers? The clearest benefit of a longer tenor is lower monthly repayments. With the same interest rate, the longer the loan term, the smaller the monthly instalment. This makes housing finance accessible to more people as the debt-service-to-income ratio becomes lighter. Bonai Subiakto, Finance and Risk Management Director of PT Sarana Multigriya Finansial (Persero) or SMF, says that the longer tenor is basically aimed at increasing affordability. “The main objective is affordability. With the same interest rate, a longer tenor certainly reduces instalments, enabling more people to access KPR,” he said at a press conference in Jakarta on Wednesday (4 March 2026). In addition, a longer tenor also gives households room to manage long-term finances. Although instalments are lighter, a longer tenor also has consequences. One of them is that the total interest payable over the life of the loan will be higher. The longer the loan term, the longer interest is calculated on the outstanding principal. This means the total amount paid for the home could be much higher than the initial property price. On the other hand, a longer tenor does not necessarily mean an increased risk of default. According to Bonai, the level of distressed credit or non-performing loan (NPL) or default risk does not directly correlate with the length of the loan tenor. He explained that increases in NPL are usually related to a decline in purchasing power or economic shocks affecting people’s incomes.