Loan EMI calculator after RBI MPC meet: Reserve Bank of India (RBI) governor Sanjay Malhotra on Friday announced the Monetary Policy Committee’s unanimous decision to cut the key repo rate by 25 basis points. Repo rate is the rate at which banks are able to borrow money from the RBI.
A repo rate cut is always good news for home loan borrowers, since EMIs come down. But this time around, it’s a double bonanza for the middle class! With FM Nirmala Sitharaman having announced NIL income tax up to Rs 12 lakh income levels in Budget 2025, the relief in loan EMIs is the cherry on the cake.
Experts say that come April 1, 2025, middle class and common man will enjoy the twin benefits of changes in income tax slabs and rates and lower EMIs.
So how much will you save on EMIs? What does the income tax relief + lower EMIs combination mean for middle class monthly savings? And, importantly, when will your loan EMIs start coming down? We take a look:
Repo rate cut: By how much will EMI come down?
According to loan EMI calculations provided by BASIC Home Loan, an individual with a home loan amount of Rs 50 lakh and paying a current interest rate of 8.75% for a 30 year loan will see a reduction of around Rs 889/- per month in the EMI. The EMI amount will go down from Rs 39,335/- to Rs 38,446/-
Source: BASIC Home Loan
- For a Rs 1 crore loan at current interest rate of 8.75%, the EMI will come down from Rs 78,670/- to Rs 76,891/-
- For a Rs 50 lakh loan at current interest rate of 9.55%, the EMI will come down from Rs 42,225/- to Rs 41,315/-
- For a Rs 1 crore loan at current interest rate of 9.55%, the EMI will come down from Rs 84,450/- to Rs 82,630/-
Also Read | Income Tax Slabs FY 2025-26 explained: 20 FAQs individual taxpayers should check to understand tax rates, income tax benefit under new tax regime
Bonanza for the middle class! What Income Tax Relief + EMI Cut Means
The biggest takeaway for the middle class is the combined bonanza from income tax slab and rate changes under the new income tax regime and the prospect of lower EMIs in the coming months. In an analysis BankBazaar explains this better:
“A salaried person with a gross income of Rs 25 lakh and a home loan of Rs 50 lakh (20 years, 9%, 12 EMIs paid by March), can hope to save a total of Rs 1.37 lakh in FY 2025-26. This will be through a combination of interest savings on the home loan rate reduction of 25 basis points and the tax savings from higher tax slabs from April 1,” says Adhil Shetty, CEO of BankBazaar.
*Source: BankBazaar. Loan assumed as 2x salary for 240 months at 9% with 12 EMIs paid, and the 13th EMI starts from April 2025.
The analysis suggests that an individual under the new income tax regime with a gross salary of Rs 25 lakh will now possibly save up to Rs 11,461/- per month with the changes in income tax slabs, rates and the reduced interest rate on loan. This benefit could go up to Rs 13.389/- per month for an individual earning a gross salary of Rs 50 lakh.
New Income Tax Regime: Latest Income Tax Slabs FY 2025-26
When will your loan EMIs come down?
According to Vivek Iyer, Partner and Financial Services Risk Leader at Grant Thornton Bharat, the repo rate cut transmission will take about 3 to 4 months. “It may not be transmitted in full as banks would need to transmit it only to borrowers whose credit standing is good and hence on an overall portfolio basis it may vary from bank to bank,” Iyer told TOI.
Also Read | Budget 2025 Income Tax calculator explained: Save up to Rs 1.1 lakh! How income tax slab changes will benefit taxpayers at different salary levels under new regime
Atul Monga, Co-Founder and CEO, BASIC Home Loan also says that it will take some time for the repo rate cut relief to trickle down to loan borrowers.
“The MPC’s decision to reduce the policy rate by 25 basis points to 6.25% is a strategic move to fuel economic growth by making borrowing more affordable. Both existing and new borrowers under floating rate loans stand to benefit from lower interest rates, improving loan affordability and accessibility. Fixed rate loan borrowers will remain unaffected from the rate cut,” Monga told TOI.
“That said, banks and housing finance companies may take some time to fully transmit the benefits of this rate cut to borrowers, depending on their policies and rate cycle. Lenders have to reset their external benchmark lending rates at least once in 3 months. Borrowers will see benefits once the lenders resets their benchmark rates, which can vary depending on the lender and customer profile,” he explains.
Also Read | Latest income tax slabs 2025-26: How much tax do individuals earning slightly above Rs 12 lakh have to pay? Marginal relief calculations explained
