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.

List of Banks Offering Lower Interest Rates After RBI Policy Cut

Bank	Old Rate	New Rate	Effective From
Punjab National Bank (PNB)	8.85%	8.35%	June 9, 2025
Bank of Baroda (BoB)	8.65%	8.15%	June 7, 2025
Bank of India (BOI)	8.85%	8.35%	June 6, 2025
Indian Bank	8.70%	8.20%	June 6, 2025

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%	8.35%	8.20%	8.15%
Loan Amount	₹1 Crore	₹ 1 Crore	₹1 Crore	₹ 1 Crore
Interest Amount	₹ 1,15,00,000	₹ 1,06,00,000	₹ 1,03,00,000	₹ 1,02,00,000
Savings on Interest Amount	-	₹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?

Not All Loans Will Become Cheaper

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.

3 Things to Check with Your Banks

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:

Current Interest Rate: If you have a bank account, log in to the loan tab to check your current interest rate. If the interest rate has declined, then check the percentage of change. If not, then follow the next step.
Reset Date: A reset date must be specified on the ‘Loan Repayment’ tab of your bank’s application. After this date, the bank will implement changes to the interest rates of your existing borrowers.
Refinancing: Some banks take a little longer to reflect the changes in the interest rate of the existing loans. In such a case, it would be better for you to refinance your loan with another 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.

Also Read - What is a Mortgage Loan? Meaning, Process & Eligibility Explained

Decrease Loan Tenure or Decrease EMI

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	Can invest more for better returns	Focus on decreasing liabilities

Bonus Tip: Pradhan Mantri Jan Awas Yojna (PMJAY)

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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