Home Loan: EMIs go up as banks hike interest rate? Follow THESE tips to save money

To control inflation, in a previous Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) increased benchmark interest rates by 35 basis points, bringing the overall repo rate to 6.25 percent, despite hiking the rates in four tranches earlier. As a result, the interest rate levied on loans will increase. The largest banking regulator previously increased the repo rate to 5.9 percent in an effort to combat the inflationary crisis. Following suit, loan interest rates are expected to increase as a result of the ongoing attempt to tighten policy.

Scroll ahead to this gallery to find out the tips to save money on your home loan.

An excellent first step is to request a reduced interest rate from your lender. You can be qualified for a lower rate if you've amassed a high credit score over time. It's probable that your loans are more expensive if you obtained them from NBFCs. You might then consider refinancing with a different lender. Processing charges and other extra costs apply, though. However, over time, the money you save on interest may prove to be more valuable.

While choosing greater monthly payments means your loan will be repaid sooner, which could help you save more, increasing your EMIs may not be simple. You might pay off your 20-year loan up to 7 years sooner, for instance, if you raised your EMI by 5 percent annually.

Another choice is to make an additional EMI payment each year. By doing so, you can reduce your interest payments and pay off a 20-year loan in roughly 17 years.

The option to pre-close might be worthwhile to consider even if the majority of borrowers financing homes do not have the luxury of doing so. The opportunity cost of investing your money may not be as appealing as you had anticipated due to the recent volatility in the stock market. Pre-close to save time, money, and the worry of looking for a better deal.