If you have a home loan in mind to build that dream home, then the recent Reserve Bank of India (RBI) rate hike will certainly will impact your purse.

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The development comes after the central bank raised the repo rate by 25 bps to 6.5 percent in the last week.

This in turn would mean that the rate at which RBI will lend money to banks will see a significant rise.

The move, which is taken after considering overall economic health, is set to affect various sectors of the economy including individuals.

One key component thus affected as banks reciprocate to the rate hike with their own hike is the home loan rates.

Already a number of banks have announced an increase in the interest rates indicating to the general direction that is to be taken by financial institutes.

This is especially required as marginal cost based lending rate (MCLR) of banks will go up in response to the rate hike.

The hike, thus created will impact both existing burrowers differently.

The existing borrowers will see the equated monthly installments (EMI) for their MCLR linked loans increase after the resetting of the home loan rates.

This increase will be calculated beginning from the loans reset date impacting the purse of the borrower.

However, the situation also marks a clear signal for future home loan candidates to speed up their process.

As the banks have started increasing the rates, it's likely that the trend will continue leading to further rise in the future, highlighting the need to apply for home loan as early as possible.