The Reserve Bank of India (RBI) recently announced a hike in the REPO rate, raising it to 6.5%. This decision was made to curb rising inflation. However, this increase in the REPO rate will eventually affect home loan borrowers. Banks are likely to raise interest rates on home loans due to the higher cost of borrowing, which will increase monthly repayments, making it harder for people with multiple loans.

While the recent REPO rate hike might not impact existing home loan borrowers, it will undoubtedly pose challenges for new borrowers (Source). Here are some tips to deal with the higher interest rates on home loan repayments:

1. Opt for a Fixed Rate

If you have a home loan with a floating rate of interest, you may want to consider switching to a fixed-rate home loan. A floating rate can make it challenging to manage your repayments when interest rates rise. Most NBFCs and banks in India give you the option to choose between floating and fixed rates. Opt for the one that suits your repayment profile best.

2. Negotiate with the Bank

If you have a strong credit history, use it to your advantage by negotiating for a lower interest rate. Banks are more likely to offer better terms to borrowers who have consistently made timely payments in the past.

3. Budget Planning

Effective budget planning can help reduce unnecessary expenses and ensure that you can make your home loan repayments on time. By carefully tracking your spending and adjusting accordingly, you’ll be in a better financial position to handle your loan obligations. You can also use a home loan repayment calculator to plan your finances before committing to a long-term loan.

4. Seek Financial Advice

It’s a good time to seek professional financial advice. A financial advisor can guide you on how to make your home loan repayments more manageable. With expert insights, you can take a more informed approach to your loan and financial planning.

5. Repayment Strategy

Many financial experts recommend increasing your monthly EMIs by 5% annually. By doing so, you can significantly reduce the loan tenure and the total interest paid over the life of the loan. Making small increases in your EMI payments over time can help you pay off your home loan faster.

6. Debt Consolidation

Debt consolidation may also help simplify your financial situation. By consolidating multiple loans into one, you only have to worry about a single repayment, which can make it easier to manage. This can be particularly useful if you have various loans with different repayment schedules.

Conclusion

Home loans are among the most common types of loans in India. While the recent REPO rate hike has caused some anxiety among borrowers, it can also be seen as an opportunity to adopt better financial strategies. By following the tips outlined above, you can find ways to manage and successfully repay your home loan.

At Capri Loans, we offer affordable home loans that empower you to achieve your dream of owning a home. Explore our wide range of home loan products and take the first step toward purchasing your dream home today.

REPO Rate Hike: How Home Loan borrowers Can Tide Through This

REPO Rate Hike: How Home Loan borrowers Can Tide Through This