Reducing Home Loan EMI: Should you go for fixed-rate or floating repo rate-linked loans?

how to reduce home loan emi


As the RBI today decided to keep the repo rates unchanged at 6.5%, existing borrowers or homebuyers looking to avail of home loans in the near future can take a sigh of relief. However, borrowers buyers may face a dilemma as to whether to choose floating or fixed rate home loans.

Currently, interest rates from most banks are in the single digits, hovering between 8.7% to 9.65%. While some banks may be offering lower fixed-rate loans, it may make sense to existing borrowers to stick to the floating rate loans as RBI may go for repo rate cuts in the coming months, according to an expert.

“For home loan borrowers, it is better to stick to their floating interest rate loans for now. Fixed-rate loans may be available in the market at some discount compared to floating-rate loans. However, considering that rate cuts are expected a few quarters down the line, it makes sense to stick to floating rate loans,” says Anshul Gupta, Co-founder and Chief Investment Officer of WintWealth.

Also Read: RBI Repo Rate hike pause: Smart way to close home loan fast

However, new borrowers should carefully evaluate the impact of fixed or floating-rate loans on their current financial situation before applying.

“With the repo rate remaining unchanged, borrowers are now faced with the difficult decision of whether to opt for fixed-rate loans that may be available at a discount or stick to floating-rate loans. While fixed-rate loans offer an assurance of a constant repayment amount, they come with a higher initial cost. On the other hand, floating-rate loans offer more flexibility but could result in higher EMIs in case of an increase in interest rates,” says Atul Monga, CEO and Co-Founder of Basic Home Loan.

“It is important for borrowers to carefully consider their financial situation and future plans before deciding which loan option is best suited for them,” he adds.

Also Read: How to make the most of FD in RBI’s current Repo Rate regime?

The RBI’s decision to maintain a pause on repo rates was on the expected lines. The housing industry welcomed the decision as unchanged home loan interest and EMIs would provide a boost to the sector.

“In line with industry expectations, the RBI has maintained a status quo on its benchmark lending rate. With this, the repo rate will be maintained at 6.5%. This augurs particularly well for the real estate sector in the country. Amid all growth indicators moving in the right direction, the consumer spirit would get a renewed boost from the RBI move, which means home loan interest rates would remain at the current level,” said Dhruv Agarwala, Group CEO,, and


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