Home Loan EMI Calculation: After the introduction of the general budget, everyone’s eyes were fixed on the Reserve Bank of India (RBI) meeting of the six -member monetary policy committee (MPC). As expected, the central bank announced a reduction of 0.25 per cent in the repo rate for the first time in about five years. Due to decrease in the repo rate, the EMI of Home Loan, Car Loan, Personal Loan is believed to be low. Let us know from Home Loan EMI Calculator that if you have taken a loan of Rs 30 lakh for 20 years, then how much your loan EMI will be reduced after your interest rates decrease.
Understand eMI calculation
Loan Amount: 30 lakh rupees
Loan Tenure: 20 years
Interest Rate: 8.50% annually
EMI: Rs 26,035
Interest in total tenure: Rs 3,248,327
Total Payment: Rs 6,248,327
Loan Amount: 30 lakh rupees
Loan Tenure: 20 years
Interest Rate: 8.25 % annually (rate after 0.25 % decrease)
EMI: Rs 25,562
Interest in total tenure: Rs 3,134,873
Total Payment: Rs 6,134,873
(Note: This calculation is based on SBI Home Loan EMI calculator.)
EMI, how much benefit in interest?
Home loan EMI calculation is clear from the EMI calculation that due to the reduction of interest rates by 0.25 percent, your EMI will reduce Rs 473. At the same time, if the interest rates of your home loan remain stable for the next 20 years, then you will now have to pay Rs 113,454 less interest in the entire tenure.
This meeting is very important amidst dull economic growth and stock markets fluctuations. In December 2024, Sanjay Malhotra took over as Governor after Shaktikanta Das ended his term. This is the first meeting of the MPC in which he has joined as a governor.
New home loan is linked to External Benchmark
According to RBI rules, banks’ home loans are now connected to marginal cost lending rate (MCLR) and repo linked lending rate (RLR). In 2019, the central bank directed all banks to link the new home loan to the external benchmark, as the bank was not taking full advantage of the cut in the repo rate to the customers.
In addition, the central bank had directed banks to link all types of retail and personal loans to an external benchmark. For this, banks were given the option of RBI’s repo rate, 3 or 6 months’ government Treasury Bill rate, or any other benchmark market interest rate published by Financial Benchmarks India Private Limited (FBI). Older loan takers have been given the option to transfer their loan to benchmark linked rate or to remain in the old system.