NEWS & ADVICE : HOME LOANS
What should you do if interest rates are expected to rise?
By Joseph Samson
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Shift to another lender offering lower floating rate loan

Shifting to another lender who is offering at least 50 basis points lower floating rate loan than the existing lender on the balance tenure of not less than 7 to 8 years can be a nice alternative. It may be beneficial as banks and lending institutions often charge low rate from the new customers as compared to the existing ones. So it is wise to be informed about the market situations and finalize on the best deal.

Reduce your EMIs

Since the increasing interest rates will raise your EMIs, it is suggested to pre-pay a part of your loan in order to keep the EMI payment at the original level. As most banks do not charge part pre-payment penalty, it is an exceptionally excellent option to pay a part of your loan if you have funds at your disposal.

On the other hand if you do not have extra money to pre-pay a part of your loan, ask your lender to increase the loan tenure to keep the EMI at the same level and lessen your burden. However it should be noted that the lending institutions do not increase the loan tenure beyond the age of retirement which is 60 years for salaried people and 65 years for self-employed.

Purchase the home right away

If you are planning to buy a house and interest rate are expected to rise further, then you should not wait. If the interest rate rises in the future then they will put pressure on the property prices that may hamper the purchase you plan to postpone.

 


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Richelle Watford (Posted: Mar 25, 2015)
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