Higher home loan EMIs after RBI repo rate hike; how you can cut total interest payout

Table of Content

• DLF sales bookings rise 62% to over ₹4,000 crore
• Repo rate hikes hit home loan household budgets. Have EMIs peaked?
• Home Loan Interest Rate for Amount up to 35 Lakh
• Should you opt for a fixed or floating rate home loan?
• Now might be a good time to buy a house. Here is a 7-point homebuyer’s checklist for 2022
• ICICI Bank, PNB, Bank of India hike MCLR home loan interest rate by this much
• Home Extension/Improvement Loan

By entering the home loan interest rate, home loan amount and tenure of the loan in a home loan EMI calculator, you can determine the monthly payable EMI as well as the total interest component for any given home loan amount! At PNB Housing, you get the best home loan rates in the market as long as you meet our easy eligibility criteria. Existing borrowers can use strategies like balance transfers or prepayment choices to lessen the burden of their loan in order to lessen the impact of this rate increase. Apart from State Bank of India , ICICI Bank, mortgage lender HDFC Ltd., the Punjab National Bank has also announced the hike in the home loan interest rate from October 1, 2022.

In the table below, BankBazaar.com illustrates what has been the likely impact of the 190 basis points repo rate hike so far this year on Rs 50 lakh home loan EMIs. Additionally it looks at the possible hike in EMI if the repo rate is raised by another 50 basis points this fiscal year. Interest rates may be close to peaking as experts see the RBI putting a stop to repo rate hikes in the coming months. The minimum home loan interest rate applicable to you is often subject to market conditions and other factors such as the applicant’s income, type of employment, credit score, home loan amount, type of interest opted for, etc.

DLF sales bookings rise 62% to over ₹4,000 crore

Adhil Shetty of BankBazaar.com says that since inflation is moderating, the rates are somewhere close to their peak. He advises prepaying home loans based on availability of funds since this can shorten the ballooning loan tenor. Monga of BASIC Home Loan recommends revising the repayment plan to manage the increased EMI burden. This can be done by opting for a longer tenure loan to reduce the EMI burden, he says. "In such scenarios, the borrower would pay a higher total interest amount, but his EMIs would remain the same. It would help the borrower with their cash flow monthly," Monga tells TOI. If you already own a piece of land and would like to build your dream home on the same, you can consider a home construction loan.

With the rising real estate prices in India, a Home Loan is the only way through which most people fulfil their dream of buying a home. To better meet the needs of the borrowers, lenders in India now offer different types of Home Loans. The processing fee is the most important and visible cost of a house loan. It is a fee you must pay to banks or non-bank financial institutions for them to process your home loan application. It is a one-time expense that is generally paid in advance – that is, rather than having it deducted from your loan amount, you must pay it to the bank/NBFC out of your pocket.

Repo rate hikes hit home loan household budgets. Have EMIs peaked?

With an aim to tackle inflation, the Reserve Bank of India has been increasing the repo rate since May 2022. Following the same, banks are also passing the rate hike to borrowers. Bank of India Home Loan EMI Calculator is a handy digital tool to calculate the financials of the proposed home loan.

The EMI provides the foreknowledge to plan the financials matching the applicant’s monthly earnings. The applicant can try out different variables to align with the homeownership project for a lower EMI. Aspirant homeowner the insight to explore funding options and help arrive at an informed decision aligned with the needs.

Home Loan Interest Rate for Amount up to 35 Lakh

According to Vivek Iyer, Partner and Leader, Financial Services Risk, Grant Thornton Bharat, loan EMIs will rise further in the near future. Every lender charges you interest on the total principal home loan amount you borrow from them. This interest amount is calculated on the basis of a percentage figure called the home loan interest rate.

In the first month, the interest component is high while the principal is lower. With the reduced outstanding every month, the interest component goes down while the principal goes up. ICICI Bank and Indian Bank increased their benchmark lending rate by up to 35 basis points, making loans more expensive for the borrowers on Tuesday. Union Bank of India has raised its marginal costs of funds-based lending rates by 5 basis points across all tenures . In a recent survey of economists and experts done by Times of India Online, a majority expect the central bank to raise repo rate by another 30 to 60 basis points this financial year. The trajectory of the repo rate cycle is dependent not just on inflation coming under control, but also on the rate hikes by the US Federal Reserve.

Union Bank of India- The minimum processing fee in percentage is 0.5 % and the minimum processing fee amount is Rs.20,000. IOB Home Loan- The minimum processing fee in percentage is 0.5% and the minimum processing fee amount is Rs. 20,000. IDBI Home Loan- The minimum processing fee in percentage is 0.5% and the minimum processing fee amount is Rs.2,500.

Prepayment of the home loan reduces the interest burden as the credit goes towards the principal, thereby reducing the loan outstanding. The borrower can continue with the existing EMI for an early closure or reduce the EMI and adjust the tenure accordingly. Bank of India Home Loan EMI Calculator with different amounts and tenures leads to an identical EMI of Rs.662 per Lac, one of the lowest in the home loan market.

The recent RBI regulations are more focused on payments businesses for regulating BNPL players. ICICI hiked the ICICI Bank External Benchmark Lending Rate (I-EBLR) to 9.10% p.a.p.m. effective from August 5, 2022. The announcement was made just a few hours after the Reserve Bank of India hiked the key policy rates by 50 basis points.

Here is a look at basic documents required for a home loan as per Kotak Mahindra Bank. Elon Musk’s Twitter reinstated several journalists’ accounts that were suspended for a day over a controversy on publishing public data about the billionaire’s plane. The table has been generated only with a ten-year tenure for the applicant’s easy grasp.

Canara Bank increased its Marginal Cost of Funds Based Lending Rate and updated its Repo Linked Lending Rate . The conventional home loan application process is seen as tedious, with multiple visits to the branch. The documentation process also involves stacks of papers, such as third party agreements, home loan agreements, etc. Customers of HDFC can now contact the company via WhatsApp for loan servicing support or to seek a call back for a new loan.

"Pre-paying 5% of the loan balance once a year can help pay off a 20-year loan in 12 years. The math varies from one borrower to another," he tells TOI. "The objective should be to pay off any loan in its intended time-frame and not let the interest balloon out of control," he adds. Atul Monga, CEO of BASIC Home Loan says borrowers who already feel the pinch of a hike always have the option to extend their tenure period to keep the EMIs constant.