Your home loan EMI may go up soon. Are you financially prepared?

 With the economy slowly recovering from the effects of the Covid epidemic, economists believe the Reserve Bank of India will begin the process of interest rate normalisation and boost the repo rate in the second half of next year. If the RBI raises the repo rate, banks will almost certainly pass the rise on to their home and auto loan customers, as they are heavily influenced by the repo rate.

After the pandemic broke out, the central bank cut the repo rate by an unprecedented 110 basis points in two consecutive drops, easing the financial burden on individuals and institutions and assisting the economy's recovery. The repo rate is now at 4%, which is a new low.

Home loan rates have dropped to as low as 6.50 percent as a result of the repo rate cut. We all know that current low rates aren't going to last forever, and that they may rise sooner rather than later as inflation rises.

Assume that interest rates on home loans rise by 125 basis points during the next year. In this situation, your home loan interest rate will rise from 6.75 percent to 8%. If you have a Rs 50 lakh home loan with an EMI of Rs 38,018 per month, your EMI will rise to Rs 41,822 per month. This equates to an additional outlay of Rs 45,648 each year. Are you financially prepared for this added expense?

It's worth noting that when home loan rates rise by 10 to 25 basis points, banks usually don't raise EMIs. In such circumstances, they extend the term to maintain the same EMIs. Banks will be required to raise EMIs if home loan rates rise significantly by 100 basis points or more.

Managing rising EMI will be difficult unless you receive a pay raise. To deal with this circumstance, financial advisors recommend assuming a moderate house loan rate and investing the remaining EMI in a debt fund using a systematic investment strategy. For example, an EMI of Rs 41,822 for a 20-year home loan of Rs 50 lakh at 8% interest is Rs 41,822. At 6.75 percent interest, the total will be Rs 38,018. In this scenario, imagine that the standard house loan rate is 8% and invest the difference of Rs 3,804 in a debt mutual fund using a systematic investment plan (SIP).If interest rates rise, this extra cash will come in handy, and you'll be in a better financial position to bear the EMI hike.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more. 

Comments

Post a Comment

Popular posts from this blog

What information do you need to apply for a business loan?

Image
 A business loan or overdraft could assist you with your next purchase, cash flow management, or business expansion. You (and any directors, partners, or guarantors) may be asked to give the following information when applying for company financing: Financial statements, preferably prepared by an accountant Proof of individual income Bank statements Identification A few extra things if you’re a start-up business These documents might assist your financial provider in gaining a better understanding of your company's financial status. You can apply for a variety of business funding options, including business loans, overdrafts, and credit cards. If you're asking for asset financing, you may be required to provide additional documentation. Financial statements Your financial statements will indicate your asset, liability, and net worth positions, as well as your income and expenses, all of which will be utilised to assess if you can meet your current and proposed payback obligatio
Read more

How to Easily Find Top & Affordable Loan Company In India?

Image
  Easy Loan Mart is one of the leading Loan Company In India . We offer affordable loan services of different types like Housing loans, Business loans, Instant loans. Easy Loan Mart offers no pre-payment fees, no processing fees, quick and easy loan processing, no pre-closure fees, and no partial pre-payment fees, among other things. To know the best loan offers & benefits, just dial our customer service helpline number +91-9477079053. What is Loan? A loan is the purchase of the present use of money with the commitment to return the amount in the future on a pre-determined timetable and at a pre-determined interest rate. The terms and duties between the lender and the borrower are clearly stated in the loan contracts.  What are the types of Loan Services? Easy Loan Mart offers three types of loan services. We mentioned below in the list. 1. Home Loan/Housing Loan 2. Business Loan 3. Personal Loan 4. Instant Loan Home Loan A home loan often referred to as a mortgage, is an amount o
Read more

A Guide to Eligibility for Business Finance

Image
 Almost every firm will require financing at some point. Some businesses require money urgently, such as to pay employees or pay a tax bill. Some businesses require it to support their day-to-day operations, such as purchasing inventory to fulfil consumer orders. Some businesses require it to expand, such as to pay for new facilities or machinery. Whatever the cause, the company seeking funding must meet certain eligibility requirements. We've outlined the eligibility criteria you should be aware of, as well as how you may prepare for them, in this article. What is eligibility? Eligibility is a method of determining how hazardous it is for a lender or finance provider to give you with funds. It should also tell them how much money they'll be able to give you responsibly. Why is eligibility important? It would be a foolish move on the lender's part to lend you money if you couldn't afford to pay it back. In that case, they'd be out of pocket, so it's in their bes
Read more