Home loans are typically high-value financial commitments, and it puts borrowers under significant pressure in terms of managing their finances. Thus, a small change in home loan interest rates can be very challenging due to the additional monetary burden.
Therefore, it is vital to know the ways to deal with this situation to avoid any further difficulties.
Ways to deal with housing loan rate hike
- Part-prepayment: It is an efficient way to counter this sudden hike in home loan interest rate. This facility allows borrowers to prepay a substantial portion of the principal amount, which ultimately reduce their monthly installments. Even though it is not directly associated with the surge in interest rate, it can aid borrowers to deal with this situation.
- Balance transfer: Home loan balance transfer is another way of tackling this situation. In case a borrower can negotiate better terms and a more attractive interest rate with another lender, he/she can transfer the debt and avoid this sudden hike.
- Reduce EMIs through negotiation: EMI negotiation with the existing lender can help borrowers to mitigate the effects of this sudden hike in home loan interest rate. They can talk to the financial institution to lower their monthly installments to ease their financial burden. However, borrowers must know that reducing EMIs will increase the tenor of their loan, and subsequently their overall cost of borrowing.
Borrowers can take note of the pointers mentioned above to deal with increased home loan rates.
