Effect Of Interest Rate Increase On Your Home Loan
Whenever there is increase in your home loan interest, banks keep the emi same and increase term of the loan. Here is an example of loan of Rs. 30 lacs for 20 years @ 9.9% & EMI of Rs. 28752. What will be effect of rate increase of 2% on this loan?
|Rate Increase of Home Loan||.5%||.75%||1.00%||1.50%||2%|
|Increase of Loan Term||2.73 years||4.72 years||7.55 years||27.09 years||Never End|
|Total Loan Term||22.73 years||24.72 years||27.55 years||47.1 years||Monthly interest is more than EMI|
This situation of uncontrolled loan can be avoided by simply monitoring your loan rate and its effect on your loan outstanding. Generally home loan institutions dont keep you informed regularly, they increase the rate without informing you and when there is reduction in interest, they wait for your letter. If your loan is more than 2 years old, there are possibilities that your rate has increased by nearly 2%. In that case your monthly EMI may not be sufficient to cover the monthly interest on your loan and outstanding loan may start increasing. Check your existing interest rates and take necessary steps to reduce your rate.
You can keep your loans in control by updating your loan details on Planyourworld, this will give you customized alerts so that you can protect your home and you dont work for bank only.