February 8, 2025 - Home loan borrowers are likely to see major savings after the Reserve Bank of India (RBI) yesterday, February 7,  announced a Repo Rate cut by 25 bps - to 6.25% from 6.5%. This rate cut directly translates into reduced EMIs for homebuyers and will enhance a homebuyer’s ability to go for a loan.

A lowering of interest rate by 0.25% means lower interest rates on the borrowed amount. This will give the borrower two options - either to go ahead with the same EMI, thus reducing the tenure of the loan. Or opt for a reduction in EMIs. Either way it is a win-win for home loan borrowers.

Some experts advise going for a tenure cut and leaving the EMI amount as it is. This will save you total interest amount.

“If the rate cut takes effect from April 1, borrowers can expect per-lakh interest savings of Rs 3,002 for the remainder of the year. On a Rs 50 lakh loan, this means savings of Rs 1.50 lakh in the second year alone,” says one analyst.

Earlier on February 1, in the Union Budget Finance Minister Nirmala Sitharaman had announced zero Income Tax for those with income up to Rs 12 lakh, increased TDS limits on rental income and increased home loan interest deductions. All these factors are likely to prove a bonanza for the middle class, going forward.

With Media Inputs