- Date : 08/02/2023
- Read: 2 mins
Home loan borrowers will have to pay more with the hike in repo rate to 6.5%.
EMIs on home loans are about to increase as the RBI has increased the repo rate by 25 bps, increasing to 6.5%. The move will change how home loan borrowers repay their home loans in terms of loan tenor or monthly EMIs.
Also Read: Do you know about these home loan charges? Understand them before applying for a home loan.
What Should You Do?
You can increase the EMI, tenor, or prepay the loan as a home loan borrower. Experts believe that the timeframe you wish to repay your home loan matters. The good thing is that experts believe this to be the last hike in the coming time, as inflation is under control. You can expect this hike to be the last on your loan for quite a while.
Rate Hike Impact
BankBazaar's CEO, Adhil Shetty, said that the existing borrowers would be troubled by the hike in the repo rate. He added that new borrowers will now have to borrow at higher rates than earlier. Borrowers will now have to pay higher monthly EMIs or extend their tenors. Retail loans like personal, auto, home, etc., will get costlier. Banks borrow from central banks at a higher value when the repo rate increases. Banks pass on the cost hike to the customers, charging higher interest on loans. It means that borrowers must pay higher interest. He added that it might affect a borrower's financial situation more if they have multiple loans or limited income.
Also Read: How can NRIs apply for home loans in India?
Conclusion
BASIC Home Loan CEO and Co-Founder Atul Monga says that there are several ways borrowers can handle the increased EMIs. The RBI has hiked the repo rates by 250 bps since May 2022. However, it is possible to reduce its impact by choosing a floating interest rate as it falls and rises along with the market. Try prepaying the loan in the early stages when interest is higher. Your principal amount will reduce, and the overall interest will reduce consequently. He suggests you save more, research lenders, and maintain good credit.
EMIs on home loans are about to increase as the RBI has increased the repo rate by 25 bps, increasing to 6.5%. The move will change how home loan borrowers repay their home loans in terms of loan tenor or monthly EMIs.
Also Read: Do you know about these home loan charges? Understand them before applying for a home loan.
What Should You Do?
You can increase the EMI, tenor, or prepay the loan as a home loan borrower. Experts believe that the timeframe you wish to repay your home loan matters. The good thing is that experts believe this to be the last hike in the coming time, as inflation is under control. You can expect this hike to be the last on your loan for quite a while.
Rate Hike Impact
BankBazaar's CEO, Adhil Shetty, said that the existing borrowers would be troubled by the hike in the repo rate. He added that new borrowers will now have to borrow at higher rates than earlier. Borrowers will now have to pay higher monthly EMIs or extend their tenors. Retail loans like personal, auto, home, etc., will get costlier. Banks borrow from central banks at a higher value when the repo rate increases. Banks pass on the cost hike to the customers, charging higher interest on loans. It means that borrowers must pay higher interest. He added that it might affect a borrower's financial situation more if they have multiple loans or limited income.
Also Read: How can NRIs apply for home loans in India?
Conclusion
BASIC Home Loan CEO and Co-Founder Atul Monga says that there are several ways borrowers can handle the increased EMIs. The RBI has hiked the repo rates by 250 bps since May 2022. However, it is possible to reduce its impact by choosing a floating interest rate as it falls and rises along with the market. Try prepaying the loan in the early stages when interest is higher. Your principal amount will reduce, and the overall interest will reduce consequently. He suggests you save more, research lenders, and maintain good credit.
