Home Loan Trap: How Outdated Rates Secretly Drain Your Wallet

• Many borrowers unknowingly pay more due to outdated base rate or MCLR-linked loans, missing out on external benchmark benefits.
• Fixed-rate loans, while offering certainty, can lock borrowers into higher costs when market rates fall, with limited exit options.
• The impact of higher interest feels invisible initially, but it slows principal repayment, increasing the total interest paid over the loan's lifetime.
• Banks have little incentive to proactively switch borrowers to cheaper benchmarks; it's up to the borrower to request a reset or refinance.
• Regularly check your loan's benchmark, spread, and principal repayment progress; consider rate resets, refinancing, or prepayments to save money.

Why It Matters: Regularly review your home loan rates and benchmarks to avoid overpaying and ensure financial savings.