Business / Rising EMIs What You Should Do If You Have Home Loan

RBI Repo Rate: The Reserve Bank of India (RBI) has increased the repo rate by 50 basis points. Now the repo rate has become 4.9 percent. In May, the RBI had increased the repo rate by 40 basis points, after which the rate rose from 4 percent to 4.4 percent. After this your home, auto and personal loans will become expensive. RBI Governor Shaktikanta Das said that this step has been taken to check rising inflation, especially fuel and food.

What is Repo Rate?

Repo rate is the rate at which banks borrow from the Reserve Bank. Its burden usually falls on the general public. If the bank has to pay a higher rate of interest to the RBI on the loan, then they will charge more from their customers as well.

After this latest move of RBI, banks will further increase their EMI. After the announcement of May 2022, many banks have already increased their interest rates on loans. After today's announcement of RBI, EMI may increase further.

But what if you have taken a home loan? Will your EMI burden also increase? Is there any way to control it? Let me tell you some tips.

1. Choose low interest rates: Not all banks in the country charge the same interest rate for home loans. HDFC Bank interest rates will be different as compared to SBI. Customers can also transfer their loan from one lender to another, so that they can get a lower interest rate. This facility is available free of cost in most of the banks.

2. Extend the tenure: The longer the tenure, the higher the EMI to be paid. If you feel that due to financial constraints you are facing difficulties in repaying the EMI, then you can ask the bank to extend the tenure of the home loan. Most of the banks offer a maximum tenure till the age of 60 years of the borrower.

3. Partial Prepayment: Customers also have the option to pay a part of their loan along with the first installment. This will reduce the EMI burden as the amount paid will be added to the outstanding principal. This will also reduce the loan tenure.

4. Think before taking a new loan: Before taking a new loan, you must also check your financial health. If the interest rates increase, you will have to pay more interest on the new loan, which will affect your existing loan. Therefore, the advice is to close the old loan first.