Anisha Kumari | Jun 11, 2025 |
Home Loan of Rs. 50 Lakh: Should you reduce EMI or Tenure to take benefit of reduced Repo Rate
Buying a home is a big step for many people and most of us have to take a home loan to achieve this. What most of the people don’t realize is that even a small decrease in interest will help them to save a big amount over time. The Reserve Bank of India has recently made a change which can benefit many loan borrowers. The banks have started to give loans at lower interest rates with a cut in the repo rate. This chance helps people to reduce their monthly payments or pay off their loan faster. Let us know about this in a simple way.
The repo rate has been reduced by 50 basis points by the RBI. By this, banks are now able to borrow money at a lower cost and in return, the public will get loans at lower interest rates. This change will help people to take loans with smaller EMIs or close their loans earlier.
Suppose you have a home loan of Rs. 50 lakhs at 9% interest. This interest may go down to 8.5% after the repo rate cut. This small change will result in big difference in your savings. There are two options by which you can save your money.
Suppose your monthly EMI might have been Rs. 44,900 at 9 percent. And after the rate drops to 8.5 percent. This could make your new EMI around Rs. 43,400. This saves of Rs. 1,500 every month which adds up to about Rs. 3.6 lakhs over the entire loan period. This option is perfect if you want to lower your monthly expenses.
If you continue to pay the same EMI of Rs. 44,900 after the rate cut your loan can be closed 20 months before. This can save you around Rs. 9 lakhs in total interest. It is a smart choice if someone wants to finish their loan early and save more money.
Check with your bank if your home loan is linked to the repo rate. When your bank is linked then you may already be benefiting. If not, ask your bank how to switch. Decide whether you want to save each month or repay the loan faster. Both choices are helpful depending on your needs. Even a small change in interest rates can help you save big if you plan wisely.
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
