Home loans often involve substantial amounts and extended terms, with borrowers paying considerable interest, influenced by prevailing rates and the loan duration.
Home loan borrowers have seen one of the steepest hike in interest rates to the tune of 2.5% which has pushed up the home loan EMIs by more than 20% and total interest payout by over 40% for many home loan borrowers. What home loan borrowers should do now as the RBI has decided to keep the repo rate unchanged.
Interest rates on floating rate home loan especially EBLR home loans have risen by almost 2.5% within last 16 months due to which the EMIs have gone up. Borrowers will now need to pay a much higher total interest due to higher interest rate. However, smart use of partial prepayment can significantly bring down the total interest outflow and help borrowers to pay off the loans quickly.
Owning a home through a home loan offers equity growth, stability, tax benefits, and investment potential. Renting allows for short-term flexibility and initial cost savings