EMI Calculator: Before May 2022, banks and housing finance organizations offered home loans at interest rates of 6.50%. However, the Reserve Bank of India (RBI) began raising the repo rate in order to reduce inflation in April 2022 in response to retail inflation rising to 7.80 percent.
The RBI raised the repo rate from 4% to 6.50% in six steps, which led to an increase in the interest rates and monthly payments for home loans offered by banks and housing finance companies.
Homebuyers who had secured loans at 6.50 percent were compelled to make EMI payments at interest rates of 9%, which threw off their family budgets. For instance, if a homeowner had obtained a Rs. The EMI would have been Rs. 40 lakh over 20 years at a rate of 6.50 percent. 29,823.
However, they would now be required to pay a Rs. 33,568 on the identical loan. This amounts to an additional cost of Rs. 44,940 annually, assuming they choose to increase their EMI and maintain the same term. The EMI repayment period is longer than the 60-year retirement age limit for most homebuyers.
In this circumstance, homebuyers have several choices. If you have a home loan with a floating rate and a long repayment period, you can negotiate a lower interest rate with your bank or housing finance company. They can also request a reduction in the term and an increase in their EMI amount—for which they may be charged a small fee.
On the other hand, new home loan customers with excellent credit scores often receive attractive rates from housing finance companies and banks. As a result, homebuyers can look into this option to get a loan at a lower rate.
A slight increase in EMI can result in lower interest payments to the bank and a shorter repayment period, despite the slight burden on their finances.
