RBI Repo Rate: Hello friends, whenever the Reserve Bank of India (RBI) holds a meeting, home loan borrowers are always looking for one piece of news: whether their EMIs will decrease. This time too, millions of people hoped that the repo rate would be reduced and their monthly installments would become lighter.
But the RBI decided to keep the repo rate stable at 5.25 percent. Many people were disappointed by this news, but the truth is that even without a reduction in the repo rate, you can reduce your EMI and save lakhs of rupees on your entire loan.
Why were people shocked when the repo rate remained unchanged?
RBI Governor Shaktikanta Das clarified after the Monetary Policy Committee (MPC) meeting that there would be no change in interest rates for the time being. This directly means that bank loan rates will also remain at their previous levels. For those who were hoping that their next installment would be a little lighter, this decision was a disappointment.
But the world of loans doesn’t revolve solely around the repo rate. With a little understanding and proper planning, the same customers who are currently feeling trapped can benefit.
Small change, big benefit
A home loan is a long-term burden. If you add a little extra money every month to your EMI, which runs for twenty-five or thirty years, the effect is magical. The bank considers this a pre-payment, and the principal amount starts decreasing rapidly. Interest is always calculated on the remaining principal, so the faster the principal amount decreases, the sooner your EMI burden will lighten.
Many people think that a few hundred rupees won’t make a difference, but this very thinking leads to losses of lakhs of rupees. If you understand the correct math, you’ll realize that small extra payments made in the initial years become significant savings in the future.
Loan transfer is also a viable option
If your bank is charging a high interest rate, transferring your loan to another bank can also be a wise move. Sometimes, you can get a half or one percent lower interest rate elsewhere. This difference may seem small, but on a loan of fifty lakh rupees, this difference can lead to savings of up to twenty lakh rupees.
People often don’t take this step due to fear of paperwork, whereas the process has become much easier these days. A decision made at the right time can completely change the trajectory of your loan.
The Magic of Reducing the Loan Tenure
If you aim to repay your loan in 25 or 20 years instead of 30, the interest amount automatically decreases. While the EMI might increase slightly initially, this approach provides the greatest relief in the long run.
Many families have used this strategy to repay their loans ten years ahead of schedule. This not only saves money but also provides peace of mind.
Prudence is the Real Key
We have no control over the repo rate, but we do have control over our habits. A little discipline in spending, smart use of bonuses or extra income, and timely decisions can help you get out of the loan trap sooner.
Those who simply wait for the RBI’s decisions miss out on opportunities. The real benefit goes to those who understand and utilize the options available to them.
A home loan is not a punishment, but a responsibility. With the right strategy, this loan can become a blessing. Reducing your EMI is absolutely possible even without a reduction in the repo rate; all it takes is the right mindset and a little planning.
Disclaimer: his article is for general informational purposes only. Loan-related decisions should be made based on your financial situation, bank terms, and the advice of a financial advisor. Figures and savings estimates may vary depending on the bank and individual circumstances.
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