4 Things To Do After A Home Loan Rate Hike

  Author: Naveen Kumar

When your home loan equated monthly instalments (EMI) increases thanks to an increase in the home loan rate, you might just want to accommodate it in your monthly budget. However, if there are sustained increases in home loan interest rates over time, you will need to do much more. Your home budget can only handle so much of the dent made by rising housing loan EMIs. Here are four things that you need to do after a rise in home loan rate, especially during periods of rising interest rates.

Check if a cheaper alternative exists Find out if there are other home loan providers offering home loans at much lower rate to new borrowers. There is often some difference in the interest rate offered to existing and new borrowers by home loan providers.

Explore home loan refinance options If another home loan provider offers you a loan at a lower interest rate and the difference is 0.5-1.0 percentage points or more, consider taking your home loan to a new home loan provider.

Consider increasing the EMI instead of a longer tenure If you are without any lower cost alternative option, consider paying a higher EMI. Avoid increasing the home loan tenure, as many more months or years, could get added than you anticipate.  Remember, you need to repay all loans well before retirement or your retirement savings will suffer in the final years leading to retirement.

Extend your home loan tenure as a last resort If your home budget has no scope for accommodating a higher EMI, request the home loan provider for an extension of the loan tenure. However, ensure that with pay hikes, you subsequently increase your home loan EMI.

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