The Rising Home Loan Rates and Your Action Plan

Have you bought a dream home with floating home loan interest rates? It is a common housing finance trend in India. Most of the borrowers are aware of the advantages of floating home loan rates. You can enjoy a lower EMI and prepay your home loan at 0% prepayment charges.

But, people are not prepared for any sudden and unanticipated increase in home loan interest rates . Yet, most borrowers need to be prepared. Because it is impossible to go through home loan tenure of 15 to 30 years without a hike in home loan rates. So, here is a smart action plan to help you with it.

Your action plan:

There are several plans of action available for borrowers. Feel free to select one you can easily manage.

Plan your monthly cash flow

Believe it or not, managing monthly cash flow is the most important part of home loan repayments. Home loan rates in India determine the EMI, which needs to be paid every month. Otherwise, a borrower may default on a home loan. It can allow the housing finance company to seize rights of the property and sell it to recover the investment. Therefore, you need to ensure that home loan EMI fits into your monthly active income easily. So, save more than home loan EMI. This is the best way to avoid getting caught off guard. You may spend the pending funds if you do not need them. But, having them accessible is the key to a stress-free life.

Devise a repayment strategy

All housing finance borrowers need to save funds in order to pay home loan EMI. But, a smart repayment strategy is a great starting place for your action plan. Thus, you can remain prepared for any spike in housing loan interest rates ahead of time. The strategy is to save additional funds into easy-to-liquidate investment tool for emergencies. You can use it to pay EMIs in case of job loss, medical emergencies or unanticipated increase in housing loan interest rates.

Generate instant cash

Generating instant cash is the last resort if your monthly active income does not suffice to pay EMI due to unanticipated hike. You can liquidate assets, emergency funds or borrow against them. Home loan rates in India don’t witness this type of hike frequently. But borrowers must know that generating instant cash is a much better option than defaulting on a home loan EMI.

A smart borrower will understand the factors influencing home loan rates in India. Then, he can keep an eye on them to avoid getting caught off guard. This is easier said than done. However, it is worth the effort. So, make smart financial choices and stay prepared for surprises. Home loan repayment is a great ride for 15 to 30 years.