Home Loan EMI: this news has brought great relief to every person who has taken a home loan or is thinking of taking one. The Reserve Bank of India, RBI, has recently cut its repo rate for the third time in a row. This time the cut of 0.50% has brought a wave of happiness in the hearts of the people. If we add the reduction of the last two times, then overall the repo rate has been reduced by 1% so far. This means that for those who are paying monthly installments by taking home loan, car loan or any kind of loan, this is an opportunity to save a lot of money.
Home Loan Interest Rate Cut
If you were fulfilling your dream of buying your house by taking a home loan at an interest rate of 9.5%, then now after this new announcement of RBI, your interest rate will come down to about 8.5%. Understand, suppose you have taken a home loan of Rs 30 lakh whose tenure is 20 years. Earlier you had to pay a fixed amount every month as EMI. But now due to the reduction in interest rate, your EMI will be reduced by about Rs 1,929. This is not just a monthly saving, but you will also see a huge saving of about Rs 4.63 lakh in the total interest. If you look at the same thing on a loan of 50 lakhs, then the EMI will be reduced by Rs 3,215 and a total interest saving of up to Rs 7.71 lakh is possible. And if your loan amount is 75 lakhs, then with a reduction of Rs 4,823 in the EMI every month, you will save up to Rs 11.58 lakh. On the other hand, this saving will be even more on a loan of 1 crore – your EMI will be reduced by Rs 6,431 every month and the total interest will benefit up to Rs 15.43 lakh.
How to withdraw savings according to your loan?
Now the question arises that what if your loan amount does not match the examples given above? So there is nothing to worry about. There is an easy way for you to withdraw your savings yourself. All you need to do is find out your home loan amount, interest rate and loan tenure. After this, you can use many online home loan EMI calculators. SBI’s home loan calculator in particular is very reliable and simple. You just go to their website https://homeloans.sbi/calculators and enter your old interest rate, loan amount and tenure there. This will tell you what your old EMI and total repayment amount were.
Then enter the same information with the new interest rate (which has now been reduced). The calculator will immediately tell you the new EMI and the total amount. Now subtract the new total payment from your old total payment, the savings will be in front of you. In this way you will be able to see how much your monthly EMI has reduced. With this simple process, you can estimate your savings correctly and plan your finances in a better way.
What does the repo rate cut mean?
Many people must be wondering what this repo rate is and how it affects their loan. So the repo rate is the interest rate given by RBI to the banks, at which the banks borrow money from RBI. When RBI reduces the repo rate, money becomes cheaper for the banks, so the banks also start giving less interest on loans to their customers. The direct benefit of this is to the customers taking loans because their EMI gets reduced. This is the reason that as soon as the repo rate is reduced, there is huge saving on big loans like home loans.