You Won’t Believe How Much You’ll Save After RBI’s Latest Repo Rate Cut
The Reserve Bank of India (RBI) has cut the RBI repo rate cut by 50 basis points (0.5%), which is great news for home loan borrowers. If you have a repo-linked home loan (RLLR), your EMIs could drop quickly, giving you instant relief. Let’s understand how this works and who benefits the most.
RBI repo rate cut reduces EMIs on RLLR home loans instantly. Know how fast your loan rate changes and how much you can save with repo-linked interest.
What Is Repo Rate and RLLR?
The repo rate is the interest rate at which RBI lends money to banks. When RBI cuts this rate, banks also reduce the interest on loans.
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RLLR (Repo Linked Lending Rate) is a type of floating interest rate that directly depends on the repo rate. If the repo rate goes down, your home loan interest rate also drops. If it goes up, your EMI increases.
RLLR vs MCLR: Which Is Better?
Home loans can be based on:
- MCLR (Marginal Cost of Funds Based Lending Rate)
- RLLR (Repo Linked Lending Rate)
MCLR-based loans take longer to adjust after a repo rate cut. It can take 6 to 12 months.
RLLR-based loans change faster—usually within 3 months. So if RBI cuts rates today, your EMI will reduce sooner with RLLR loans than MCLR loans.
How Much Will Your EMI Reduce?
Let’s say you have a ₹40 lakh home loan for 20 years.
- Before rate cut: 8.5% interest = ₹34,700 EMI
- After rate cut: 8.0% interest = ₹33,450 EMI
- Monthly savings: ₹1,250
- Total savings over loan: ₹3 lakh to ₹30 lakh depending on how long the new rate stays
That’s a huge saving just because of a small change in the repo rate!
READ MORE: 20 Factors to Consider Before Investing in Mutual Funds
Benefits of RLLR-Based Home Loans
- Faster EMI reduction when RBI cuts repo rate
- Transparent system – no hidden bank charges
- Rates reset every 3 months, not 6 or 12
- Good choice for long-term loans where you can save big
Disadvantages You Should Know
- If RBI increases repo rate, your EMI will go up just as fast
- EMIs may fluctuate every 3 months, which can be tough to plan for
- Not ideal if you prefer stable monthly payments
Can You Switch to RLLR-Based Home Loan?
Yes, you can. Just request your bank to switch from MCLR to RLLR. It usually costs ₹1,000–₹2,000.
- Best for borrowers with 10+ years left in their loan
- If your bank doesn’t offer RLLR, refinance with another bank that does
- Always check how much you’ll save before switching
Also Read: How much you will get after 20 Years, if you made Step-up SIP
This RBI repo rate cut could give real financial relief to many borrowers—but only if you’re on RLLR-based loans. If you’re still on MCLR, it may be time to consider switching and saving.
Also Read: You Won’t Believe What Rs 13 Lakh MF Investment Can Turn Into in 20 Years
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