REPO Rate Hike: How Home Loan borrowers Can Tide Through This
Published: Mar 20, 2023
The Reserve Bank of India recently announced a hike in the REPO rate, taking it up to 6.5%. The decision was made to deal with the rising inflation. This increase in the REPO rate is eventually going to affect home loan borrowers. That’s because banks are going to increase the interest rates on home loans due to the high cost of borrowing. These higher interest rates, in turn, will result in an increase in monthly repayments, thereby making it difficult for people with multiple loans.
While this recent hike in the REPO rate might not affect old home loan borrowers, it is definitely going to make things difficult for new home loan borrowers. (Source)
Here are some tips on how to deal with the higher interest rates on home loans repayments: –
Opt for a Fixed Rate
If you have a home loan with a floating rate of interest, then you might want to consider switching to a fixed rate home loan to reduce the impact of rising interest rates. A floating rate can make it difficult for you to make repayments on your home loan. NBFC home loan companies in India generally give you the option to choose between the two; pick one that suits your repayment profile the best.
Negotiate with the Bank
If you have a good credit history then you can use it to your advantage by requesting your bank for a lower interest rate. Most banks will take this aspect into consideration that you have been making payments consistently on time in the past.
Budget Planning
It is important to plan your budget to reduce expenses so that you can make your repayments for the home loan. We often end up spending money on things that we don’t need. So, planning your budget can also help you with repaying the home loan. You can also utilize a home loan repayment calculator to plan your finances prior to taking this long-term loan commitment.
Financial Advice
Now would be the right time to seek financial advice from a professional who can better guide you on how to make your home loan repayments. That way, you’ll not only get the right direction but also insightful advice which will keep you in good stead as a home loan borrower.
Repayment Strategy
Most financial advisors recommend that home loan borrowers increase their monthly EMIs by 5% annually. Home loans can be paid in half the time simply by doing a pre-payment of 5% of the loan annually.
Debt Consolidation
And finally, debt consolidation can also make it easier for borrowers to make repayments on their loans since they no longer have to worry about multiple repayments for loans. It is best to have all your debts consolidated as a single debt.
Home loans are one of the most common loans in the country. The recent hike in the REPO rate has definitely made home loan borrowers nervous. That being said, it can also be treated as a silver lining.
If you take into consideration the above mentioned tips, then you can certainly find ways to make repayments on your home loan. At Capri Loans, you can avail affordable home loans that empower you to realise your dream of owning a home well in time. Explore our array of home loan products and get going on your home purchase.