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Contributor‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.
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If you are paying off a home loan or an auto loan, then you must be aware that “Acche Din Aane Wale Hain!” Read the blog to know how to get an extra ₹2.5 lakh from the government just for building a house.
The RBI announced the third major rate cut of 50 basis points on June 6, 2025, following 25 bps cuts in February and April. This means that the RBI is lending money at cheap rates to the commercial banks. In turn, commercial banks will lend you loans at comparatively more affordable rates, as well.
The current repo rate stands at 5.5%, and this is how the change in repo rate would influence your savings:
Repo Rate Cuts | February 2025 Cut (25 Base Points) | April 2025 Cut (25 Base Points) | June’25 Cut (50 Base Points) |
Rate of Interest | 14% | 13.75% | 13.25% |
Loan Amount | ₹ 1 Crore | ₹ 1 Crore | ₹1 Crore |
Interest Amount | ₹ 1,99,00,000 | ₹ 1,94,00,000 | ₹ 1,85,00,000 |
Savings on Interest Amount | - | ₹ 5,00,000 | ₹ 15 lakhs |
EMI Savings | - | ₹ 2000/month, i.e., ₹4,80,000 in 20 years | ₹ 6000/month, i.e., ₹14 lakhs in 20 years |
While the above-mentioned rates of interest are hypothetical, four government banks have recently decreased the interest rates on home loans.
Bank | Old Rate | New Rate | Effective From |
8.85% | 8.35% |
Looking at just numbers in the table, you won’t be able to assess how much you would save.
Read More –How To Calculate Home Loan EMI in 2025 – Step-by-Step Guide
So, have a look at Ravi and how his home loan interest rate will change with the rate cuts.
Ravi, a business owner in Noida, is currently paying off a ₹1 Crore home loan at 9% for 20 years. Now, let’s see how his savings would differ from 1 bank to another.
Banks | - | Punjab National Bank (PNB) | Indian Bank | Bank of Baroda (BoB) |
Rate of Interest | 9% |
₹ 1 Crore
Interest Amount
₹ 1,15,00,000
₹ 1,06,00,000
₹ 1,03,00,000
₹ 1,02,00,000
Savings on Interest Amount
-
June 9, 2025
8.65% | 8.15% | June 7, 2025 |
Bank of India (BOI) | 8.85% | 8.35% | June 6, 2025 |
8.70% | 8.20% | June 6, 2025 |
8.35%
8.20% |
8.15% |
Loan Amount | ₹1 Crore | ₹ 1 Crore | ₹1 Crore |
*T&C Apply
₹9 lakhs
₹ 12 lakhs |
₹ 13 lakhs |
EMI Savings
-
₹ 3700/month i.e. ₹ 45,000 every year
₹ 5,000/month i.e. ₹ 60,000 every year
₹ 5,400/month i.e. ₹ 64,000 every year
How would it feel to pay ₹ 13 lakhs extra on a home loan, when you can invest this money and pay off the loan faster?
Did you know that the interest rates of your bank should be linked to the repo rate if you want to avail of the benefit of the rate cuts?
For loans with a tenure of more than 7 years, the interest rate is linked to the repo rate, also known as RLLR (Repo Rate Lending Rate).
Repo Rate: The Rate at which the RBI lends loans to commercial banks.
RLLR: Rate at which banks lend loans to other borrowers.
If your loans are linked to an external benchmark lending rate, then it might take 2-6 months for the banks to reflect the change in your loan repayment cycles. However, there are 3 things you should check immediately in your home loan repayment.
Following the RBI’s third consecutive rate cut, most banks have reduced the interest rates on loans. However, make sure to check these things with your bank:
If you plan to stay with the same bank, then you will have 2 options to receive the benefits of the loans. Check out the following section to learn.
You will save a lot after the RBI's rate cut. However, you have 2 options to make those savings. Follow the table below to choose your next move:
Strategy | Pay Less EMI | Reduce Loan Tenure |
EMI Amount | Less than before | Equal to or more than before |
Loan Tenure | Equal to or More than before | Less than before |
Foreclosure Fees | - | - |
Savings | Focus on decreasing liabilities |
If you have taken a loan to build your home for the first time, then the Indian Government will subsidise you with approximately ₹ 2.5 lakhs by the end of the process. So, what are you waiting for?
Log in to your bank application and check your updated interest rates right now!
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