The Reserve Bank of India (RBI) has just announced a 25 basis point cut in the repo rate. This means that loans for homes and cars are going to get cheaper. This move is expected to ease the financial burden for millions in India, as their monthly payments (EMIs) will drop. Home loan borrowers will particularly benefit since these loans are typically large and long-term.

 

With the repo rate cut, floating interest rates on home loans will decrease by 0.25%. However, whether fixed-rate home loans will also see a reduction will depend on the individual bank or financial institution’s policies.

 

If you’re paying off a home loan between Rs 20 lakh and Rs 1 crore, we’ll break down how much you could save each month and overall thanks to this rate cut. Even a small dip in interest rates can lead to significant savings for borrowers. We’re assuming an interest rate of 9.5% and a loan term of 25 years. If banks follow suit and lower home loan rates by 25 bps, here’s what you can expect in savings.

 

Where you can save money:

Savings on a Rs 20 lakh loan:

– Current EMI: Rs 17,473.93

– Expected EMI:Rs17,127.64

– Monthly savings: Rs 346.30

– Total estimated savings: Rs 1,03,888.91

 

Savings on a Rs 30 lakh loan:

– Current EMI: Rs 26,210.90

– Expected EMI: Rs 25,691.46

– Monthly savings: Ra 519.44

– Total estimated savings: Rs 1,55,833.36

 

Savings on a Rs 40 lakh loan:

– Current EMI: Rs 34,947.87

– Expected EMI: Rs 34,255.27

– Monthly savings: Rs 692.59

– Total estimated savings: Rs 2,07,777.82.

 

Savings on loans up to Rs 50 lakh

 

Current EMI: Rs 43,684.83

Expected EMI: Rs 42,819.09

Monthly savings: Rs 865.74

Total estimated savings: Rs 2,59,722.27

 

Savings on a loan of Rs 60 lakh

 

Current EMI: Rs 52,421.80

Expected EMI: Rs 51,382.91

Monthly savings: Rs 1,038.89

Total estimated savings: Rs 3,11,666.73

 

Savings on a loan of Rs 70 lakh

 

Current EMI: Rs 61,158.77

Expected EMI: Rs 59,946.73

Monthly savings: Rs 1,212.04

Total estimated savings: Rs 3,63,611.18

 

Savings on a loan of Rs 80 lakh

 

Current EMI: Rs 69,895.73

Expected EMI: Rs 68,510.55

Monthly savings: Rs 1,385.19

Total estimated savings: Rs 4,15,555.63

 

Savings on a loan of Rs 90 lakh

 

Current EMI: Rs 78,632.70

Expected EMI: Rs 77,074.37

Monthly savings: Rs 1,558.33

Total Estimated Savings: Rs 4,67,500.09

 

Savings on a loan of Rs 1 Crore

 

Current EMI: Rs 87,369.67

Expected EMI: Rs 85,638.18

Monthly savings: Rs 1,731.48

Total estimated savings: Rs 5,19,444.54 .