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Debt has become expensive! Reserve Bank has increased the repo rate, see in the calculation how much your EMI will increase now

highlights

There are two types of loans available from the bank, one at floating rate and the other at fixed rate.
Fixed rate interest rates are slightly higher than floating rate.
The repo rate has increased in the fifth consecutive meeting of the Monetary Policy Committee (MPC).

New Delhi. The Reserve Bank has increased the repo rate in the fifth consecutive meeting of the Monetary Policy Committee (MPC) on Wednesday. Although this time the increase has been less than before, but it will have a direct impact on your EMI. This time the Reserve Bank has increased the repo rate by 0.35 percent, due to which all types of loans including home, auto and personal will become expensive.

In fact, from the year 2019, most of the retail loans from banks have been linked to external benchmarks like repo rate. This means that now any increase in the repo rate will directly affect the interest rate of your loan. That is, after increasing the repo rate by 0.35 percent, now the interest rate of your loan will also increase by the same amount. The effect of this increased interest rate will be seen on both new and old customers.

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No effect on these customers
There are two types of loans available from the bank, one at floating rate and the other at fixed rate. Banks mostly disburse loans on floating rate and any change in repo rate has a direct impact on it, which increases the interest rate and EMI. However, for customers who have taken home, auto or personal loans at fixed rates, the change in interest rates does not affect them. It is worth noting that the interest rates of fixed rate are slightly higher than the floating rate.

What is the effect on home loan
Suppose you have taken a home loan of Rs 30 lakh for 20 years at an interest rate of 8.30 per cent. At this rate, your EMI comes to Rs 25,656 per month. That is, you will pay Rs 31,57,490 as interest during the entire loan period. Now after increasing the repo rate, if the interest rate of your loan increases to 8.65 percent, then your EMI will increase to Rs 26,320 on the loan of the same and equal amount.

With this, you will pay Rs 664 more as EMI every month. In this way, the total burden of EMI will increase on you by Rs 7,968 in a year. Not only this, you will have to pay Rs 33,16,849 as interest in the entire tenure. That is, with this increase, the total burden of Rs 1,59,359 will increase on you in the form of interest.

2.25 percent increased interest in 2022
To bring inflation under control, the Reserve Bank has increased the repo rate five times in the year 2022. During this, the total increase has been 2.25 percent. That is, the interest rate of your loan has increased by two and a quarter percent. In such a situation, suppose you had taken a home loan of Rs 30 lakh at 7% interest rate for 20 years, then before May your EMI was Rs 23,259 and you would have to pay Rs 25,82,153 as interest in the entire tenure.
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But, since May till now the interest rate has increased by 2.25 percent. That is, now the effective interest rate of your loan has become 9.25 percent. At this rate of interest, you will have to pay EMI of Rs 27,476 every month. That means the burden of Rs 4,217 has increased on you every month. Not only this, now you will have to pay Rs 35,94,241 as interest in the entire tenure, which is Rs 10,12,088 more than the earlier interest rate. Means the Reserve Bank has put a burden of about 10 lakh rupees on you from May till now.

Tags: bank loan, business news in hindi, Home loan EMI, housing loan, rbi policy

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