Home loans EMI: Rate of interest on Home loans has increased in view of the Reserve Bank of India increasing key lending rates (RBI). Several banks have raised their lending rates in response to the banking regulator’s increase in the repo rate. For instance, HDFC Bank raised its Marginal Cost of Lending Rate (MCLR) across all tenures by 10 basis points. Currently, the bank charges 8.40% for a year. Just before the RBI decision, State Bank of India (SBI) raised its MCLR rate by 10 basis points. The SBI MCLR is currently 8.25 percent for a year. As a result, EMI either has already increased or is anticipated to increase shortly. Here are ways to assist you in resolving the issue of increasing EMIs.
Raise the EMI payment
When lending rates rise, banks typically lengthen loan terms. If there is no financial hardship, you might prefer to lengthen the loan’s term rather than increase the EMI amount. You can control the interest expense by limiting the tenure, which will result in significant savings.
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Home loans EMI: Go for alternate lenders
Always shop around to find the best bargain. Compare the interest rate on your mortgage to those offered by other institutions. A loan swap makes sense if the difference is significant. Do not transfer the loan if the difference is not significant since this may cause unneeded complications. The difference ought to be at least half the proportion, ideally.
Choose prepayment
Do you know that if you make a prepayment, banks won’t charge you anything? Although it may seem like a simple gesture, if made, it could result in significant savings on interest expenses. Prepaying the loan within the first five years of taking it out will make a bigger effect. Additionally, paying off your loan early is advised rather than investing money because the long-term savings could be greater.
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