Planning to buy a home but worried about rising interest rates and changing EMIs? Kotak Mahindra Bank has launched a new hybrid home loan scheme that can give borrowers more certainty about their monthly payments.
Under the new scheme, customers can keep their home loan interest rate and EMI fixed for up to 65 months, even if the Reserve Bank of India (RBI) changes the repo rate during this period.
Choose a Fixed Rate for 39, 52 or 65 Months
The bank is offering borrowers three options for the fixed-rate period:
39 months
52 months
65 months
During the selected period, the interest rate and EMI will remain unchanged.
This means borrowers will not see their EMI increase because of changes in the RBI repo rate.
Kotak Mahindra Bank is currently offering home loans at an initial interest rate of 7.6%.
The scheme could be particularly useful for families who want predictable monthly expenses in the early years of their home loan.
What Happens After the Fixed Period?
The fixed-rate benefit will not continue for the entire loan tenure.
Once the selected 39, 52 or 65-month period ends, the loan will automatically move to a floating interest rate.
The floating rate will be linked to the RBI’s repo rate, along with an additional margin, known as the spread, which will be decided when the loan is sanctioned.
This means the EMI and interest rate could change in the future depending on movements in interest rates.
Borrowers Could Save Up to ₹3.46 Lakh
According to Kotak Mahindra Bank, the scheme can also help borrowers protect themselves from a sharp rise in interest rates.
For example, if interest rates on a ₹1 crore home loan rise to recent high levels, the borrower could save up to ₹3.46 lakh, according to the bank.
The bank said that buying a home is only the beginning of a family’s financial journey.
In the first few years, families also have to manage expenses such as home furnishings, children’s education, savings and everyday needs, along with their home loan EMIs.
By keeping the EMI fixed for several years, the new scheme aims to make it easier for borrowers to plan their household finances without worrying about immediate changes in interest rates.
