One extra home loan EMI can save Rs 15 lakh, cut 5 yrs on Rs 50 lakh loan

With EMIs unlikely to change immediately, the focus shifts to optimising tenure, prepayments and spreads

With the Reserve Bank of India (RBI) on Friday keeping the repo rate unchanged at 5.25 per cent, EMIs on repo-linked home loans are likely to stay unchanged for now, turning the rate pause into an opportunity to shorten loan tenure rather than wait for cuts. But borrowers must note that just one extra home loan EMI a year can cut nearly five years off a standard mortgage and save borrowers over Rs 15 lakh in interest, according to experts.

 

“With the RBI holding rates steady, this is a good phase for borrowers to optimise their existing home loans rather than wait for fresh cuts,” said Adhil Shetty, CEO, BankBazaar.

 

 

Rajat Bokolia, CEO, Newstone, said borrowers should take a closer look at their current lending terms. He advised reviewing the effective interest rate, asking lenders for a reset if spreads have widened, and focusing on reducing the loan tenure. He also said early prepayments and keeping EMIs unchanged can speed up ownership instead of letting the loan run passively.

 

What borrowers can do during a rate pause

 

According to Shetty, the first step is to check how the home loan is structured.

 

• Confirm whether the loan is linked to an external benchmark such as the repo rate, which allows quicker transmission when rates change.

• Review the spread charged by the lender and negotiate if the borrower’s credit profile or income has improved.

• Reassess EMI and tenure combinations, especially in a stable rate environment supported by Budget-related income visibility.

• Use surplus funds for part-prepayments, even in small amounts, to lower long-term interest costs and bring the loan end-date closer.

 

How this works for a borrower

 

Consider a 35-year-old Noida resident with a ₹60 lakh home loan at an interest rate of 8.5 per cent for 25 years.

 

“At 35, a ₹50 lakh home loan at 8.5 per cent over 25 years is best managed, not endured. He can start by reducing tenure, not EMIs. One extra EMI a year can cut nearly five years and save over ₹15 lakh in interest,” said Jitender Yadav, Director, Roots Developers.

 

He added that bonuses and variable pay can be used for early prepayments. “Refinance only if you secure a 50–75 basis point reduction after costs, as advised by market analysts. In Noida, steady end-user demand supports faster ownership over passive repayment,” Yadav said.

 

Shetty said borrowers should look beyond just a lower monthly outgo.

 

“The focus should be on cutting the total interest paid, not just chasing a lower EMI. In a stable rate environment, continuing with the same EMI helps reduce the loan tenure faster. Using bonuses or annual increments for part-prepayments can lower the interest outgo over time,” he said.

 

He also advised borrowers to check balance transfer options if lower rates are available elsewhere and to use available tax benefits on principal and interest to improve affordability.

 

Current home loan rates across lenders

 

The following rates are compiled by PaisaBazaar.

 

Public sector banks

 

State Bank of India

Up to Rs 30 lakh: 7.25–8.70%

Rs 30–75 lakh: 7.25–8.70%

Above Rs 75 lakh: 7.25–8.70%

 

Bank of Baroda

Up to Rs 30 lakh: 7.20–9.00%

Rs 30–75 lakh: 7.20–9.00%

Above Rs 75 lakh: 7.20–9.25%

 

Union Bank of India

Up to Rs 30 lakh: 7.15–9.50%

Rs 30–75 lakh: 7.15–9.50%

Above Rs 75 lakh: 7.15–9.50%

 

Punjab National Bank

Up to Rs 30 lakh: 7.25–9.10%

Rs 30–75 lakh: 7.20–9.00%

Above Rs 75 lakh: 7.20–9.00%

 

Bank of India

Up to Rs 30 lakh: 7.10–10.00%

Rs 30–75 lakh: 7.10–10.00%

Above Rs 75 lakh: 7.10–10.25%

 

Canara Bank

Up to Rs 30 lakh: 7.25–10.00%

Rs 30–75 lakh: 7.20–10.00%

Above Rs 75 lakh: 7.15–9.90%

 

UCO Bank

Up to Rs 30 lakh: 7.15–9.25%

Rs 30–75 lakh: 7.15–9.25%

Above Rs 75 lakh: 7.15–9.25%

 

Bank of Maharashtra

Up to Rs 30 lakh: 7.10–9.90%

Rs 30–75 lakh: 7.10–9.90%

Above Rs 75 lakh: 7.10–9.90%

 

Punjab and Sind Bank

Up to Rs 30 lakh: 7.30–10.70%

Rs 30–75 lakh: 7.30–10.70%

Above Rs 75 lakh: 7.30–10.70%

 

Indian Overseas Bank

All loan amounts: 7.10% onwards

 

Indian Bank

All loan amounts: 7.15–9.55%

 

Central Bank of India

All loan amounts: 7.10–9.15%

 

Private sector banks

 

Kotak Mahindra Bank

All loan amounts: 7.70% onwards

 

ICICI Bank

All loan amounts: 7.45% onwards

 

Axis Bank

Up to Rs 75 lakh: 8.00–11.90%

Above Rs 75 lakh: 8.00–9.10%

 

HSBC Bank

All loan amounts: 7.45% onwards

 

South Indian Bank

All loan amounts: 7.80% onwards

 

Karur Vysya Bank

All loan amounts: 8.50–10.65%

 

Karnataka Bank

All loan amounts: 7.30–11.68%

 

Federal Bank

All loan amounts: up to 8.75%

 

Tamilnad Mercantile Bank

All loan amounts: 7.90–9.30%

 

Bandhan Bank

All loan amounts: 8.41–12.58%

 

RBL Bank

All loan amounts: 8.20% onwards

 

CSB Bank

All loan amounts: 8.05% onwards

 

HDFC Bank

All loan amounts: 7.90% onwards

 

City Union Bank

Up to Rs 30 lakh: 8.25–9.50%

Rs 30–75 lakh: 8.50–10.00%

Above Rs 75 lakh: 8.75–10.50%

 

Housing finance companies (HFCs)

 

LIC Housing Finance

All loan amounts: 7.15% onwards

 

Bajaj Housing Finance

All loan amounts: 7.15% onwards

 

Tata Capital

All loan amounts: 7.50% onwards

 

PNB Housing Finance

All loan amounts: 7.50% onwards

 

GIC Housing Finance

All loan amounts: 8.20% onwards

 

SMFG India Home Finance

All loan amounts: 10.00% onwards

 

Sammaan Capital (formerly Indiabulls Housing Finance)

All loan amounts: 8.75% onwards

 

Aditya Birla Capital

All loan amounts: 7.75% onwards

 

ICICI Home Finance

All loan amounts: 7.50% onwards

 

Godrej Housing Finance

All loan amounts: 7.60% onwards