Home loan EMIs are finally set to ease—thanks to the Reserve Bank of India (RBI) announcing a repo rate cut of 25 basis points. The repo rate now sits at 6%, down from 6.25%, as revealed by RBI Governor Sanjay Malhotra on April 9. And for anyone with a floating-rate home loan, this is very welcome news.
Let’s break down what it means for your wallet—and how you can make the most of it.
What’s the Repo Rate, and Why Should You Care?
If you took a home loan after October 1, 2019, there’s a good chance it’s linked to the repo rate—that’s the rate at which the RBI lends money to banks. When this rate drops, banks are supposed to pass the benefit on to you by reducing your loan interest rate.
That means your EMIs (equated monthly installments) could fall, or your loan tenure could shrink. Either way, you save money.
How Much Can You Actually Save?
Let’s say you took a ₹50 lakh home loan at 8.25% interest for 20 years. After the latest rate cut, your new interest rate drops to 8%.
You’ve got two options:
- Reduce your EMI:
Your monthly EMI would fall from ₹42,603 to ₹41,826, saving you ₹777 per month. That’s a total savings of ₹1.85 lakh over the full loan tenure. - Keep the EMI same and reduce the tenure:
Your loan will end about 10 months earlier, and you’ll save a much bigger ₹4.36 lakh in interest. 👉 Pro tip: Experts say reducing tenure is usually the smarter move—it leads to bigger savings over time.
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Thinking of Switching Lenders? Now Might Be the Time
If your current lender hasn’t passed on the full benefit of the repo cut—or if your loan is still based on older benchmarks like the MCLR or base rate—this is your nudge to switch to a repo-linked loan.
If you find a lender offering a rate that’s at least 35-50 bps lower than what you’re paying, refinancing might be worth it.
Use Bonuses and Tax Savings to Pay Off Faster
With Budget 2025 kicking in, many taxpayers are already seeing lower tax liabilities. Combine that with annual salary hikes and bonuses, and you’ve got a great chance to get ahead on your loan.
Even a small part-prepayment—say ₹50,000—or increasing your EMI by just ₹5,000/month can save you lakhs in interest over the life of the loan.
Still on an Old Loan Plan? Time to Switch
If your home loan predates October 2019, you’re probably not on the repo-linked regime. You should absolutely consider switching now.
Repo-linked loans offer better transparency and faster rate transmission, directly reflecting RBI’s rate decisions.
Final Thoughts
This rate cut is a great opportunity to take control of your loan and cut down your interest burden. Whether you choose to lower your EMIs or close your loan sooner, the key is to act now and plan smart
