RBI’s Repo Rate Hike: How To Reduce Home Loan Tenure

The Reserve Bank of India (RBI) is the central bank of India and is responsible for regulating the monetary policies of the country. One of the key tools at the disposal of the RBI is the repo rate, which is the rate at which banks borrow money from the central bank.

A hike in repo rate can have an impact on various aspects of the economy, including home loans. In this article, we will discuss how a hike in repo rate affects home loan tenure and what steps you can take to reduce it.

Impact of Repo Rate Hike on Home Loan Tenure

A repo rate hike leads to an increase in the interest rates charged by banks on various loans, including home loans. This means that the monthly EMI (Equated Monthly Installment) paid towards the home loan will increase. Additionally, the tenure of the loan may also increase as a result of the higher interest rates.

This is because a higher EMI may not be affordable for many borrowers, and they may opt to increase the tenure of the loan to reduce the burden of the increased EMI. However, this may result in paying more interest in the long run, and the total cost of the loan may go up.

How to Reduce Home Loan Tenure?

While a hike in repo rate can have an impact on home loan tenure, there are ways to reduce it. Let us discuss some of the steps that you can take to reduce your home loan tenure.

Increase Your EMI

One of the simplest ways to reduce your home loan tenure is to increase your EMI. While this may seem counterintuitive, a higher EMI means that you are paying off your loan faster, and this can help you reduce the tenure of the loan.

Additionally, a higher EMI may also result in paying less interest in the long run. However, before increasing your EMI, make sure that it is affordable for you and will not impact your monthly budget.

Make Prepayments

Making prepayments towards your home loan can also help you reduce the tenure of the loan. A prepayment is when you make an additional payment towards your home loan, over and above your regular EMI.

This additional payment goes towards reducing the principal amount of the loan, and this can help you save on interest in the long run. Additionally, making prepayments can also help you pay off your loan faster and reduce the tenure of the loan.

Opt for a Balance Transfer

If you find that your home loan interest rates have increased significantly due to a repo rate hike, you can consider opting for a balance transfer. A balance transfer is when you transfer your home loan from your existing lender to a new lender, who offers a lower interest rate.

This can help you save on interest and reduce the tenure of the loan. However, before opting for a balance transfer, make sure that you check the processing fees and other charges involved, as these can impact the overall cost of the loan.

Negotiate with Your Lender

Another way to reduce your home loan tenure is to negotiate with your lender for a lower interest rate. If you have been a loyal customer and have a good credit score, your lender may be willing to reduce the interest rate on your home loan.

This can help you save on interest and reduce the tenure of the loan. However, make sure that you compare the interest rates offered by other lenders before negotiating with your existing lender.


In conclusion, while a repo rate hike can be a cause for concern for those with a home loan, there are steps you can take to reduce your loan tenure and save on interest in the long run.

By increasing your EMI, making prepayments, opting for a balance transfer, or negotiating with your lender, you can take control of your home loan and ensure that you repay it on time and with minimum interest charges.


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