If you are paying a home loan, the RBI’s latest move will reach your wallet soon. The central bank has raised the repo rate by 0.25% to 5.50%, and banks will pass this on to floating-rate borrowers. So, how much more will you pay? We did the maths.
Will my home loan EMI go up?
It depends on the type of loan you have:
Loans linked to the repo rate (most new home loans): yes. Banks have to reset these at least once every three months, so you will usually feel the change within a quarter.
Older loans linked to MCLR: yes, but only when your loan’s reset date comes around.
Fixed-rate loans: no change until the fixed period ends.
Home loan EMI calculation: how much more you’ll pay
We took a 20-year loan and assumed its interest rate goes up from 8.50% to 8.75%. Your bank’s actual rate may be different, so check your loan statement.
| Loan amount | Old EMI | New EMI | Extra each month |
|---|---|---|---|
| ₹30 lakh | ₹26,035 | ₹26,511 | ₹477 |
| ₹50 lakh | ₹43,391 | ₹44,186 | ₹794 |
| ₹80 lakh | ₹69,426 | ₹70,697 | ₹1,271 |
A simple way to remember it: you pay about ₹16 more a month for every ₹1 lakh you owe. Over the full 20 years, the extra adds up to around ₹1.9 lakh on a ₹50 lakh loan.
Higher EMI or longer loan? Which is better
Many banks don’t change your EMI at all. Instead, they quietly add months to your loan. On a ₹50 lakh loan, keeping the EMI at ₹43,391 would stretch the loan by about 13 months.
That feels painless today, but you end up paying more interest overall. If your budget allows, ask your bank to raise the EMI instead and keep your original end date.
4 ways to soften the blow
1. Prepay when you can. There is no penalty for prepaying a floating-rate home loan as an individual borrower. Even one extra payment a year, say from your bonus, cuts your interest bill.
2. Compare your rate. If your bank charges much more than others for borrowers like you, ask for a lower rate or consider moving your loan. Check processing fees first.
3. Keep a cushion. The RBI has hinted that more hikes are possible. Keep three to six months of EMIs in an emergency fund. Our guide to money moves that beat inflation has a simple plan.
4. Stress-test new loans. If you’re about to buy a home, make sure the EMI still feels comfortable if rates rise by another 0.50%.
Should you put off buying a home?
Not necessarily. Property prices in big cities rose 7% over the last year, according to ANAROCK’s latest housing data. Waiting for rates to fall could mean paying more for the house itself. What matters is whether the EMI fits your budget, now and if rates go up a bit more.
EMI figures are our own calculations using the standard reducing-balance method. They are for illustration only; your bank’s rate, fees and reset date will decide your actual EMI.
