Simple Tips to Tackle Interest Rate Hike on Your Home Loan
Nishant Vivek 22 August 2018
Personal Finance sponsored post
Your home loan interest rate usually depends on your lender, the central bank’s policies, and the current economic climate in the country. During times of inflation, the Reserve Bank of India (RBI) may hike the base rate, which may impact your home loan interest rate and subsequently your EMIs or your tenor.
 
Longer the tenor, higher the amount you pay towards your interest on the home loan. Here are a few tips to help you manage the home loan interest rate hike.
 
Consider negotiating the loan terms with your lender
 
You can try negotiating the loan terms that your lender puts forth. Instead of agreeing with the repayment burden when there is an interest rate hike, it may help to speak to your lender first. A home loan EMI calculator may help you check the likely impact of the interest rate hike on your tenor and EMIs. Compute to see what suits your repayment schedule better. You can then negotiate with your lender asking them to adjust the home loan interest rate hike with your tenor or EMIs. Since the home loan amount is huge, increasing the tenor by 1-2 years owing to a spike in interest rate will decrease your burden momentarily. But remember, the longer you take to repay your loan, the higher will be your overall interest payment for the loan. So, ask your lender if they can consider restructuring your home loan on terms that suit you.
 
Consider prepaying a part of the loan
 
The EMI for your home loan consists of two parts—interest on the principal and the principal amount. If you face an interest hike during repayment, you can consider pooling 
together your extra income, bonus from your employer, and your savings or investment earnings. Use this handy cash to prepay a bigger chunk of your loan. This will immediately decrease your main principal amount and reduce your EMIs. So the new home loan interest rate will not be applicable on your whole borrowed sum. 
 
A word of caution: Take this step only when your prepayment amount brings you a bigger relief and considerably reduces your tenor or EMIs. You can use the home loan prepayment calculator to determine the changes you will face owing to prepayment on your loan. Dip into your savings only when you are convinced that it is a viable option.
 
Consider home loan refinancing with a different lender
 
In case you face a rate hike on your home loan, you can try getting your loan refinanced with another lender, say an non-banking finance company (NBFC). Lenders like Bajaj Finserv offer a Home Loan Balance Transfer facility, where you can switch your existing home loan without any hassles. This will not only bring down the interest rate on your home loan but also give you access to additional benefits. These include features like the Flexi Hybrid facility, 3 EMI-holiday, top-up loans, nil foreclosure charges and more.
 
As a start, you should consider the possibility of a rate hike right when you avail a home loan. Basing your choice of a lender on the interest perspective will help you start your loan journey with ease.
 
Comments
manishbajaj649.mb
2 years ago
If there is no woman in my house and later he wants to take a home loan, then he can take advantage of the Pradhan Mantri Awas Yojana subsidy.
Ravi Verma
3 years ago
I got my housing loan from SBI under staff housing loan scheme in 2012 but did not get the possesaion till now. Would I be eligible to claim PM Interest Subsidy in my housing loan
RAMNIWAS GUPTA
3 years ago
Dir.sir
My home loan is Magma finance ,
Plz .my home subsidy approval not
Credited my loan amount plz
Ashok Shukla
4 years ago
Home lone give
PATHIK
4 years ago
my uncle has taken loan in 2004, with roi 7.75%, he never checked today icici bank is charging them 13.85%, in his loan paper tenure is 240 months after almost 14 years they are saying you still have to pay for 145 months, i am moneylife customer learned lot about finance thorugh your website, this cheating according to me, now they are saying if you want to reduce rates you have to visit their branch, they are not provide call records also, i have taken conversation id its - sr582296744, can you help me in this case, print some article how housing loan customers are getting cheated, we pay EMI on time not even single emi has been bounced in last 14 years...!
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