Home Loan Interest Rates: In today's time, it is easy to dream of a house, but it is not easy to turn it into reality. Taking a home loan is an important step, but a loan taken without information can become a burden on your life. Many times, investing all the savings in a down payment increases the loan tenure and the burden of EMI remains for many years.

Before taking a home loan, it is important to understand the terms and conditions in detail and take a loan according to your capacity. Many people take home loans to buy a house, but some mistakes are made while taking a loan. People invest all their savings in a down payment, due to which the loan tenure increases. A loan that can be repaid in 20 years lasts for 25-30 years. Let's know complete information about it.

Do keep these things in mind -

After taking a home loan, many people think that they just have to pay EMI every month and the rest of the responsibility remains with the bank. But, ignoring many things with home loans (personal finance) can be a big mistake. The fluctuation in interest rates on home loans is an important aspect that needs to be understood. Many people do not know that when interest rates increase, the EMI amount also increases. If you have kept the loan tenure short, then the burden of increased EMI will fall more on you. However, it can also affect your loan tenure.

Understand the complete calculation here -

Suppose you have taken a loan of Rs 30 lakh for 20 years at a rate of 8 percent. In this case, your EMI will be around Rs 25,093. It is important to note that most banks offer home loans at a floating rate. This means that your loan rate will keep changing according to the repo rate.

If after 5 years the rate of your home loan becomes 11 percent, then your EMI will increase. This is because in the initial years, a large part of the EMI goes towards paying interest while the principal payment is less. At this time, your loan outstanding will be around Rs 26 lakh.

This means that at an interest rate of 11 percent, you will have to pay more interest, which will increase your EMI. In this situation, you will have to re-look at your budget and assess your financial situation so that you can easily handle the increased EMI.

This is how the duration of home loans increases -

Often banks increase the loan tenure after 5 years when interest rates increase to charge interest on the loan for a longer period, this reduces the burden of EMI on the customers. But this means that your loan will last for a longer period than before. For example, if your EMI is kept at around Rs 25,093, then your loan tenure will be 28 years instead of 15 years.

If your EMI is calculated for 15 years, it will increase to around Rs 29,500. In this way, your 20-year loan will have to be repaid in about 33 years. This will also increase your total interest amount significantly. Therefore, you must read and understand the terms of your loan carefully so that you can avoid such a situation.

How to protect yourself from such a situation?

To avoid the extension of the home loan tenure, it is a better option to contact the bank and restructure your loan when the interest rates increase.

This means requesting the bank not to increase the loan tenure, but to increase the EMI according to the new interest rate. Most customers make this mistake and do not get the loan restructured from the bank, increasing their loan tenure and they have to pay more interest.

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