Any increase in the repo rate will have a direct impact on the loan and EMI of the borrowers. Both existing and new customers will be affected. Since RBI’s rate hike cycle began in May 2022, banks and other lenders have been increasing loan Rate of interest. This has led to an increase in the cost of borrowings for borrowers.
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How to transfer your home loan balance
If you are having difficulty serving yourself home loan Due to rising interest rates on EMIs, it may be a good idea to transfer the balance to a lender with competitive home loan interest rates. However, one must analyze the advantages and disadvantages and calculate the additional savings that result from choosing a home loan balance transfer.
Here’s a Look at the Banks’ Offerings cheapest home loan Rate of interest.
RBI in its circular has directed banks to link their retail lending interest rates to any of the following external benchmarks:
- RBI repo rate
- Government of India 3 Month Treasury Bill Yield published by Financial Benchmarks India Pvt Ltd. Ltd. (FBIL)
- 6 Months Treasury Bill Yield of Government of India Published by FBIL
- any other benchmark market Rate of interest Published by FBIL
Most of the banks have chosen the RBI’s repo rate as the external benchmark of their choice. The lending interest rate linked to the repo rate is known as the repo rate linked lending rate (RLLR). RLLR is made up of RBI’s repo rate plus spread or margin.
home loan repayment
Usually, Equated Monthly Installments (EMIs) are used to repay the mortgage. The principal and interest components of the EMI are designed in such a way that in the initial years of your loan, the interest component will be much larger than the principal component, however in the later half of the loan, the principal component will be much larger.