Prepay home loan to tackle 190-bps rise in repo rate since May: Experts

If you don't have a surplus, opt for higher EMI rather than longer tenor

Home loan borrowers will have to bear the brunt of Friday’s 50-basis-point hike in the repo rate by the Reserve Bank of India. The benchmark rate, which now stands at 5.9 per cent, has risen by 190 basis points altogether in the current rate hike cycle.   

Tenor to increase

Suppose that a borrower took a home loan that now has a principal outstanding of Rs 50 lakh and remaining tenor of 20 years. The starting interest rate was 7 per cent. With the rate rising to 8.9 per cent, the tenor could, in theory, rise to 424 months, assuming