Four Tips To Help You With Home Loan Interest Rate Increase

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Four Tips To Help You With Home Loan Interest
Rate Increase
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• Inflation is on the rise and has entered the
  double digits now. The RBI is expected to
  increases its rates, and as a result home loan
  interest rates are set to rise as well. Before
  you begin to panic, this does not necessarily
  mean that your home loans EMIs are set to
  increase if you already have a home loan. Banks
  will not increase EMI amounts but will extend the
  tenure of your home loan.

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• This means that you will not have to pay higher
  EMIs but will have to pay them for a longer
  period of time, if your bank decides to increase
  their home loan base rates. In this scenario, it
  is always advisable to be prepared for every
  outcome possible.

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• Here are some tips to help your prepare for
  increased home loan interest rates.
• Increase your EMI even if your bank doesnt
• Use any windfalls to pay your EMIs
• Switch home loan interest to fixed rate
• Make lump sum payments whenever possible

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Increase your EMI even if your bank doesnt

• If your bank increases the base rate for loans,
  your EMIs may not increase, but the cost of your
  loan will. This means you will have to pay home
  loan interest for a longer period of time than
  originally expected. Instead of opting for a
  longer tenure, increase the amount of your home
  loan EMIs and head for a speedy home loan
  repayment.

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Use any windfalls to pay your EMIs

• Instead of setting aside a certain amount for
  savings, use it to repay your home loan interest.
  If you happen to come into any extra money like
  an inheritance or an insurance payment. Or if you
  receive bonuses, increments or incentives, use
  the money to pay off more EMIs or make a lumsum
  payment for the repayment of your home loan
  interest and principle.

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Switch home loan interest to fixed rate

• Dont go for a floating interest rate. Floating
  rates have benefits of their own when markets are
  down or fluctuating you can expect lower
  interest rates. But in the current scenario,
  floating interest rates can be risky. Go for
  fixed home loan interest rates so that you can
  prepare for all the EMI expenses beforehand.

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Make lump sum payments whenever possible

• Use your Diwali bonuses and quarterly increments
  to pay your home loan interest. This will help
  reduce the burden of higher EMIs in the long run.
  You can even repay your home loan faster by doing
  so, or reduce the tenure significantly.

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Thank You