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Home loan: New RBI rules can help to save a lot in interest; know how

By: Gopal Agarwal

Home loan borrowers burdened with high interest rates could now find it easier to change to lenders who offer cheaper loans.  Reserve Bank of India (RBI) asked banks and non-banking finance companies (NBFC) to clearly communicate the impact of any rate change on the EMIs and loan tenure.

Since the August monetary policy review, the Reserve Bank of India (RBI) has announced two key steps that will benefit retail borrowers, particularly, home loan borrowers, who service longer tenure loans.

It asked banks and non-banking finance companies (NBFC) should clearly communicate the impact of any rate change on the EMIs and loan tenure. Financial institutions have to give borrowers the choice to increase EMIs, extend the repayment period or opt for a combination of both.

This move comes after some borrowers saw their home loan tenures extending beyond 50 years due to rise in interest rates that followed RBI’s cumulative 250-bps hike since May 2022.

More recently, on September 13, the RBI directed banks to return property documents to borrowers within 30 days of loan settlement. If banks do not adhere to this timeline, they will have to pay borrowers Rs 5,000 per day for every day of delay.

These two measures will ensure that borrowers will not be saddled with prolonged repayment tenures and will be able to switch to other lenders to save on interest cost without worrying about delay in transfer of key property documents.

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