Home loan emi: The Reserve Bank of India (RBI) has taken a big decision in the Monetary Policy Committee (MPC) meeting of June 2025. The central bank repo rate has been reduced by 0.50% (50 basis points) to reduce it from 6.00% to 5.50%.
This is a third consecutive cut in policy interest rate. The first twice the first 25-25 basis point and this time 50 basis points. This decision has brought relief for the general public, especially home loans. Because the repo rate reduced the funding cost of banks, which directly affects the interest rates of the loan.
Now if you want to take a home loan for 20 years, whether it is ₹ 20 lakh or ₹ 1 crore, now EMI and Tenure can have a good savings. Let’s understand how much difference will be made on EMI and Tenure by cuts in repo rate.
What is the effect of repo rate cut?
The repo rate is the rate on which RBI gives loan to banks. When RBI reduces this rate, banks also have scope to make their debt cheaper. This is the reason that the repo rate reduction reduces the EMI of home loans, auto loans and personal loans. The purpose of reducing this is to give relief to the public, increase consumption and speed up the speed of the economy.
EMI Calculation: How much will be saved
Currently, most government banks like SBI, Union Bank of India and Canara Bank are giving home loans at around 8% interest. He has transferred the full advantage of the last few repo rate cut to customers. In such a situation, it is expected that the interest rate will come down from 8% to 7.5% after the rate cut this time. Let us understand how much saving will be saved in EMI if you take a home loan of 20 lakh to 1 crore rupees in this situation. In this, the loan period is 20 years (240 months).
| Loan amount | Old EMI (8%) | New EMI (7.5%) | Monthly savings | |
| ₹ 20 lakhs | ₹ 16,728 | ₹ 16,113 | ₹ 615 | ₹ 1,47,600 |
| ₹ 30 Lakh | ₹ 25,092 | ₹ 24,170 | ₹ 922 | ₹ 2,21,280 |
| ₹ 50 Lakh | ₹ 41,820 | ₹ 40,283 | ₹ 1,537 | ₹ 3,68,880 |
| ₹ 1 crore | ₹ 83,640 | ₹ 80,566 | ₹ 3,074 | ₹ 7,37,760 |
Note: This calculation is done from the annuity formula. This does not include processing fees, insurance or other charges. This is just an estimated EMI. The actual EMI will depend on the bank’s terms, credit scores and processing fees.
How much will be the benefit of reducing loan tenure?
Banks usually reduce the term of repaying the loan replacement in place of EMI after the repo rate cut. This will end your loan quickly and save interest. However, if you want to reduce the EMI, it will have to contact the bank for it.
Let us also understand how low the tenure will be in home loans from 20 lakh to 1 crore rupees after a cut of 50 basic points in RBI’s June MPC.
| Loan amount | EMI (Old ₹ 8%) | New interest rate (7.5%) | First tenure | New tenure | Tenure savings |
| ₹ 20 lakhs | ₹ 16,728 | 7.50% | 20 years | 18 years 9 months | 1 year 3 months |
| ₹ 30 Lakh | ₹ 25,092 | 7.50% | 20 years | 18 years 9 months | 1 year 3 months |
| ₹ 50 Lakh | ₹ 41,820 | 7.50% | 20 years | 18 years 9 months | 1 year 3 months |
| ₹ 1 crore | ₹ 83,640 | 7.50% | 20 years | 18 years 9 months | 1 year 3 months |
Note: It is believed that you do not make any changes in EMI and continue the same EMI at reduced interest rate.
Will old loan holders also benefit?
If your loan is at floating rate, then you will get the benefit of the rate cut as a decrease in the interest rate. This will reduce your EMI or reduce the loan period. It depends on the bank’s reset policy.
The floating rate is linked to the repo rate of RBI. Due to this, whenever the RBI reduces or raises the repo rate, it will directly affect the interest rate of your home loan. However, if you have taken a fixed rate loan, this deduction will not have any immediate effect.
Great opportunity for new home buyers
This is the best time for those who want to buy a house for the first time. Interest rates are lower than before. Many real estate companies are also offering discounts. In such a situation, low EMI and discounted property prices can be taken advantage of.
Atul Monga, co-founder and CEO of Basic Home Loan, says, ‘RBI’s rate cut for home loans has brought great relief. This can be a good chance for those who were hesitant to take loans till now. However, I should compare different options before taking full advantage of this favorite environment to take loans and take a decision carefully.
He said, ‘EMI of customers who have already taken floating rate loan is expected to decrease, especially if their loan is linked to repo rate. Public sector banks usually turn on such deductions quickly, so they are likely to receive new attractive loan offers. This can make customers good savings.
Is it possible to further cut the repo rate?
Atul Monga says that the RBI decides to ‘neutral’ from the policy stance ‘Acomoderative’ that RBI now wants to take further alert stance. Acmodative stance means that RBI intends to cut the rate even further. At the same time, neutral stance means that the central bank will look into domestic and international conditions. Then according to this, the repo rate will decide to reduce, increase or keep it stable.
However, experts believe that if inflation remains under control and global conditions remain stable, RBI may further cut further. This means that loans can be more cheap, which will further boost investment and consumption.
What is the opinion of the real estate sector?
The real estate sector believes that a large cut of 50 basis points in the repo rate and reduced the cash reserve ratio (CRR) to 100 basis points to 3 percent will give a lot of boost to the real estate sector.
Ashok Kapoor, chairman of Krishna Group and Chrisumi Corporation, says, “Now the repo rate has come down to 100 basis points compared to last year. This will encourage home buyers to invest in property. Later, the impact of this decision will be seen as demand in different segments of homes. This will increase both constant growth and customers confidence in the real estate market.
Aman Sarin, director and CEO of Anant Raj Limited, also believes that the repo rate cut will increase demand. He said, ‘For both new and existing borrowers, it will reduce the burden of a total of 100 basis points to a large extent. Along with this, this step will help in bringing more liquidity to the system, which will further strengthen the economic speed.
Sarin said, “We believe that it will have a positive impact on the mid and high-end real estate segment, as cheaper interest rates will reduce EMI as well as improve loan eligibility.”
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