Home loans: Are you ready for a more expensive home loan?

Reduced home loan interest rates are profitable offers for property buyers. Repo rates (RR) have abruptly declined over the past two years but there is scope for 2022. RR is the interest rate at which the RBI provides overnight liquidity to banks. If it heightens, home loans become more expensive, and vice versa.  

The RBI decided to keep the RR unchanged at 4% and the reverse RR at 3.35% in its last review meeting. 

Lately, few financial institutions have hiked their fixed deposit rates and few lenders’ home loans have also become scantily costlier.  

Customers can either choose another lender and refinance their existing loan or request their current lender to link their loan to RR.  

A pre-payment at the year's start helps accelerate a customer's loan payment. At the loan's start, even a single additional EMI prepaid can shave off months from the loan tenure. 

Once a customer's monthly income increases, it's suitable to opt for an EMI increase to reduce the overall tenure of their home loan, lowering the interest. 

Loan interest is one of the heftiest costs of homeownership and needs to be regulated to lessen costs. Smartly pinching loan payment terms can steer massive savings.