{"id":12230,"date":"2023-08-29T02:56:07","date_gmt":"2023-08-29T02:56:07","guid":{"rendered":"\/blog\/?p=12230"},"modified":"2024-06-14T18:34:02","modified_gmt":"2024-06-14T13:04:02","slug":"how-to-deal-with-home-loan-interest-rate-hikes","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/loan-for-home\/how-to-deal-with-home-loan-interest-rate-hikes\/","title":{"rendered":"How to Deal with Home Loan Interest Rate Hikes"},"content":{"rendered":"\n

When RBI\nincreases its repo rate, it brings a subsequent burden on the borrowers of home\nloan. The increase in rates by RBI results in a rate hike for all loans. As a\nresult, all the loans linked to MCLR have to drain a huge chunk of money in the\nform of interest payments.<\/p>\n\n\n\n

The lenders\nthese days ensure that you do not feel any immediate impact. However, in the\nlong term, this will dig a big hole in your pocket. And so, we bring to you,\nthis comprehensive guide on dealing with change in home loan interest rates.<\/p>\n\n\n\n

Increase the EMI, not the term<\/strong><\/h2>\n\n\n\n

When interest rates go up, most lenders increase the term and not the EMI. This prohibits any immediate increase in your cash outflow but proves to be more expensive in the long term. The interest rates are calculated by compounding rates. This implies, for the same amount, the loan with a longer tenure will cost you more than a loan with a shorter tenure.<\/p>\n\n\n\n

To save\nmoney on interest payments, make a deal with your lender to increase the EMI\nrather than increasing the term.<\/p>\n\n\n\n

Additional\nRead:<\/strong> <\/strong>Check\nout how to calculate interest rate on home loan<\/a><\/p>\n\n\n\n

Pre-pay the loan<\/strong><\/h2>\n\n\n\n

Whenever\npossible, pre-pay your loan. Most lenders do not charge extra for a pre-payment\nand if they do, it is still more cost-effective. Many financial experts suggest\nthat instead of investing your funds for a lower return, use it to clear your\nother debts. Pre-paying your loan will help you to get debt-free ahead of the\nschedule. Additionally, this will save a significant amount of money from\ndraining into interest payments. <\/p>\n\n\n\n

It is to be made clear that pre-payment will not bring change in home loan interest rates, but will reduce the total amount paid as interest by reducing the tenure.<\/p>\n\n\n\n

Refinance through a better deal<\/strong><\/h2>\n\n\n\n

Changing your lender can help you when not all lenders have increased their interest rates. There are situations where, in response to hiked repo rates some lenders hike their interest rests while some do not. If your lender increases rates, you can switch to a better deal in the market. In technical terms, this is called \u2018home loan balance transfer<\/a>\u2019 and can be initiated only after payment of at least 18 EMIs to the current lender.<\/p>\n\n\n\n

However, it\nis suggested to change your lender only if the difference in the interest rate\noffered is more than 50 basis points. <\/p>\n\n\n\n

Additional\nRead:<\/strong> <\/strong>What\nIs a Home Loan Balance Transfer?<\/a><\/p>\n\n\n\n

Go for a fixed charge<\/strong><\/h2>\n\n\n\n

One way of\ndealing with an interest rate hike is going for a fixed charge from the very\nbeginning. Fixed interest rates, unlike floating rates, do not change with\ncircumstances. You can also ask your lender to switch your rate from floating\nto fixed.<\/p>\n\n\n\n

Concerned about your home loan<\/a>? Tata Capital is here to solve all your conundrums. Being India\u2019s one of the most trusted sources for a loan, our motive is to offer you nothing but the best. Our home loan interest rates<\/a> start at just 8.50% per annum. To avail the best services at the most competitive rates, get in touch with us now! <\/p>\n\n\n\n

Apply For House Loan<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

When RBI increases its repo rate, it brings a subsequent burden on the borrowers of home loan. The increase in rates by RBI results in a rate hike for all loans. <\/p>\n

Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":12231,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[25],"tags":[],"class_list":["post-12230","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-for-home"],"yoast_head":"\nHow to Deal with Home Loan Interest Rates Hike - Tata Capital Blog<\/title>\n<meta name=\"description\" content=\"Is there a right strategy to deal with home loan interest rates hike? 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