Home loans are a popular financing option for the middle-class segment and their availability through banks and other financial institutions has been made affordable

Impact of interest rate hike

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Four ways to reduce EMI burden

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Increase the down payment

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Choose home loan prepayment

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Opting for a floating interest rate

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Benefits and risks of floating interest rate

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Prepayment penalty

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Switch your lender

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Conclusion

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Home loans are a popular financing option for the middle-class segment and their availability through banks and other financial institutions has been made affordable

Impact of interest rate hike

The repo rate hike by RBI has made home loans more expensive and borrowers will have to be ready for higher monthly EMIs or tenor extensions or both

Four ways to reduce EMI burden

Following a few simple steps can help reduce the impact of interest rate hikes

Increase the down payment

Choosing to pay a higher down payment when buying a house to reduce the EMI burden, as it leads to a lower principal amount

Choose home loan prepayment

Prepayment is the process of making additional payments over and above your regular EMI payments, and can help reduce the overall interest burden

Opting for a floating interest rate

Choosing a floating interest rate instead of a fixed interest rate can also help reduce your EMI burden by decreasing your EMI when market rates are low

Benefits and risks of floating interest rate

Floating interest rate is subject to market fluctuations, and the interest rate can increase as well, resulting in a higher EMI

Prepayment penalty

Carefully review the terms and conditions of your loan agreement before making any prepayments as many banks and financial institutions charge a prepayment penalty for prepayments

Switch your lender

Switching to a lender who offers a lower interest rate than your current lender can significantly reduce your EMI burden

Conclusion

By reducing the EMI burden, you can save a significant amount of money in the long run, as you will pay less interest over the tenure of the loan