Thread by @BahlKanan

Home loan interest rates are now ~8% from 6.5% just 3 months back

Here are 4 things you can do to reduce your #EMIs:👇

1. Shift the fresh allocation from Debt portfolio to repaying loans

PPF pays 7.1%, FDs pay ~6% (post tax ~4-5%), Annuity plans have also got similar IRR. But your Home loan is at 8%

So if you planning to make any fresh allocation to such instruments, rather pay your loan first

2. Use your bonus to repay the debt

Many corporate employees will receive bonus in September

If your allocation to equity is already very high, then rather repay your home loans first

If not, then thoughtfully allocate the same between repaying debts and allocating to equity

3. Check with your banker if they can reduce the interest rate spread

Banks generally issue loans at Repo Rate + 2.5-2.7% of spread, i.e., until 3 months ago when Repo Rate was 4%, your HL rate would have been 6.5-6.7% (4% + 2.5-2.7% spread)

If your spread is higher, it may have been due to lower credit score or many other reasons (while availing loan) which could've changed now

4. Increase your tenure

You can ask your banker to increase your Home Loan Tenure so that despite the increase in interest rate, your outflow is same

However, this is the least preferred option as this will increase your interest outgo and reduce your principal repayment

Placed this at the last because this should be the last resort

Will be explaining these and even more points in a detailed video on our FREE 'Learn Personal Finance Community' platform - learnpersonalfinance.in/s/store/course…

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@neerajarora91