Home loans EMI: How to control rising EMI, know details here

Table of Content

• Today’s gold rate: Gold slips by Rs 1,400 after surge of Rs199! Details here
• Interest rates increased for the 8th time in 8 months
• Home loans EMI: How to control rising EMI, know details here
• Can I get an approval for a home loan while I decide which property, I should purchase?
• What are the reviews of Prestige High Fields, Hyderabad?

At this rate, SBI gives home loans to customers with a credit score of more than 750. It’s advisable to limit your loan payment to a maximum of 40% of your monthly income. Making regular prepayments before the home loan tenure is over can help to reduce your interest payments considerably. Borrowers should keep paying off money lump-sum so that the principal decreases substantially over years.

However, the high interest rates can add up to almost double the amount of your loan, even if your EMIs seem low. A smart financial strategy would involve a plan to recover the interest paid on the home loan EMI so that you have more savings at the end of the day. If paying more EMI is not a problem, one can be prudent and increase her monthly repayment installment. This would help her repay the loan faster, which means she would have to pay lesser interest. The EMI calculator helps you arrive at the right home loan amount that best fits your monthly budget, by helping you decide the loan EMI and tenure most suitable to your financial position.

Today’s gold rate: Gold slips by Rs 1,400 after surge of Rs199! Details here

Leading private sector lender HDFC has hiked the retail prime lending rate by 0.50% with effect from October 1, 2022. The increased interest rate will reflect in the monthly EMI of customers from the next reset date. Regular prepayment will significantly lower the outstanding loan amount. The most popular duration for loan repayment that borrowers opt for is 20 years. However, if one wants to lower EMIs, she can extend the tenure of loans. The downside of availing this is that she would have to pay a bigger interest amount.

Housing Development Finance Corporation has announced a hike in the Retail Prime Lending Rate by 30 basis points on home loans from May 9. The hike will be applicable to existing as well as new borrowers. Each EMI is made up of interest payable on your loan and part principal repayment. Home Development Finance Corporation Ltd has hiked its Retail Prime Lending Rate by 35 basis points with effect from December 20, 2022. HDFC home rates to start from 8.65 % onwards for credit score of 800 & above.

Interest rates increased for the 8th time in 8 months

In the same example, if interest rate remains at 7.55 per cent and the prepayment tenure increases by 3 years, the interest burden will be hiked by Rs 5.39 lakh. The Reserve Bank of India has recently increased the repo rate by 50 basis points to tame rising inflation in the country. With the latest hike, the repo rate is back to the pre-pandemic level of 5.40 per cent.

Basis these three input values, the EMI calculator will compute the instalment you need to pay to the home loan provider each month. Some EMI calculators for home loan also provide a detailed breakup of the interest and principal amount you will be paying over the entire loan tenure. HDFC offers various repayment plans for maximizing home loan eligibility to suit diverse needs. Loan amortization is the process of reducing the debt with regular payments over the loan period. A home loan amortization schedule is a table giving the details of the repayment amount, principal and interest component.

Home loans EMI: How to control rising EMI, know details here

Repo rate is the rate at which the Reserve Bank of India lends money to banks and other financial institutions. It must be noted that the all-floating rate retail loans sanctioned by banks after October 1, 2019 are linked to an external benchmark. For most of the banks, this external benchmark is repo rate. Rising repo rate will shoot up the interest rates of repo-rate linked home loans and personal loans. Home loans linked to Marginal Cost of Funds-based Lending Rate and Base Rate will also become expensive as borrowing cost of the banks will surge after repo rate hike.

Now that you are convinced about the benefits of taking a home loan, what about home loan repayment, you may ask. There are a number of home loan repayment options that you could consider. However, before we discuss this, let’s understand how home loans are repaid. Your home loan is repaid through equated monthly instalments, or EMIs. This is a fixed amount you need to pay your lender each month till you complete repaying your home loan.

HDFC’s home loan calculator provides a complete break-up of the interest and principal amount. For individuals with a credit score of 750 or more, SBI, which dominates the market in terms of home loan AUM with over Rs 6 lakh crore, offers a minimum lending rate of 8.75 per cent. However, this rate is a part of its ongoing holiday promotion, which is valid till January 31, 2023. Generally, the bank's standard rate is 8.90 per cent for individuals with a credit score of 800 or more. Do you know that if you make a prepayment, banks won’t charge you anything? Although it may seem like a simple gesture, if made, it could result in significant savings on interest expenses.

Furthermore, according to HDFC, only customers with credit scores of 800 or higher will be eligible to take advantage of the new rate of 8.65 per cent. According to the statement, this rate is the lowest in the sector. As a result of the most recent RPLR increase, the minimum rate will be 8.65 per cent starting December 20.

After getting an estimate of EMI using the calculator, you can apply for a home loan online from the comfort of your living room easily with Online Home Loans by HDFC. The hike, which will come into effect from May 9, will be applicable to existing as well as new borrowers. A customer will have to pay 8.15% interest in the case of an RLLR loan and 8.55% in the case of an EBLR loan. However, the actual impact on EMI would also depend on various factors like CIBIL score, borrower’s profile, loan to value ratio, risk assessment, payment failure, etc.

Click here to check your eligibility to take a home loan from NoBroker. It is a loan to extend or add space to your home such as additional rooms and floors etc. Transferring your outstanding home loan availed from another Bank / Financial Institution to HDFC is known as a balance transfer loan. These calculators are provided only as general self-help Planning Tools.

According to HDFC, only customers with credit scores of 800 or higher will be eligible for the new rate of 8.65 per cent.

Since HDFC home loan repayment is a long-term commitment, we come across several situations where we might want to change Home Loan EMIs. Remember that, that there are additional costs involved in the process such as processing fee or penalty to transfer the loan balance from one lender to another. So, borrowers need to calculate the advantages and disadvantages and savings before opting for balance transfer. “The increase in repo rates by the RBI will in turn increase the interest rates for different products like home loans, etc.