Loan becomes Cheaper: ROI decreased, Know how much EMI will decrease

Loan borrowers have a reason to smile. The Reserve Bank of India has reduced the repo rate by 25 basis points, bringing it down to 5.25%. With this move, banks are expected to lower loan interest rates as well. So if your rate was previously 8.15%, it is likely to come down to around 7.90%. A small rate cut may not sound like much, but the savings over a long loan period are surprisingly big. Here is a clear, simple breakdown to show how much your EMI will reduce.

How Much Will Your EMI Reduce?

Loan Amount: ₹30 lakh
Tenure: 20 years
Old Interest Rate: 8.15%
New Interest Rate: 7.90%

EMI Before Rate Cut (8.15%): ₹25,390
EMI After Rate Cut (7.90%): ₹24,885

Monthly Savings: ₹505
Yearly Savings: ₹6,060
Total Savings Over 20 Years: ₹1,21,200

Yes, a 0.25% reduction in interest can save you more than ₹1.2 lakh over the full loan tenure.

Calculate EMI yourself

EMI Comparison Table

Why This Rate Cut Matters

This rate cut directly lowers borrowing costs and puts more money back into the hands of consumers. Lower EMIs also make home buying more attractive and boost overall lending activity. Floating-rate borrowers will see automatic changes when their loan resets, while new borrowers can lock in cheaper interest rates immediately. Over long tenures like 15 or 20 years, even a slight reduction in interest rate results in large cumulative savings.

What Should Loan Borrowers Do Now?

If you already have a floating-rate home loan:
Your interest rate will reduce automatically on your scheduled reset date.

If your bank delays passing on the benefit:
You can request a rate revision or shift to another lender offering a lower rate through a balance transfer.

If you are planning to buy a home:
This is a favourable time as borrowing becomes cheaper and monthly EMIs become lighter.