RBI changed the repo rate: what happens to your home loan EMI?
By the LoanReveal team · Updated 13 October 2026 · 5 min read
Short answer: if your home loan is linked to the repo rate (most floating-rate home loans from banks since October 2019 are), a change in the repo rate passes to your loan rate at the next reset, at least once every three months. Your bank then either changes your EMI or your tenure.
When rates fall, ask to keep your EMI the same so the loan ends sooner. When rates rise, watch out: if the bank stretches the tenure instead of raising the EMI, you can end up paying a lot more interest without noticing.
How a repo rate change reaches your loan
- Repo-linked (EBLR) loans: your rate = repo rate + a spread that mostly stays fixed. Banks must reset it at least once every three months, so changes reach you quickly.
- MCLR loans (older loans): the rate follows the bank's own MCLR and resets every 6 or 12 months, so changes reach you slowly and often only partly.
- Fixed-rate loans: not affected during the fixed period.
EMI or tenure: what changes, in rupees
₹50 lakh with 20 years left at 8.5% (EMI ₹43,391):
| Rate rises to 9%: new EMI if tenure stays | ₹44,986 |
| …or tenure if EMI stays | 22 yrs 4 mos |
| Extra interest if the tenure is stretched | ₹8.0 lakh |
| Rate falls to 8.25%: new EMI if tenure stays | ₹42,603 |
| …or tenure if EMI stays | 19 yrs 2 mos |
| Interest saved by keeping the EMI | ₹2.7 lakh |
A 0.5% rise adds about 2 yrs 4 mos to the loan if the EMI is held, and costs ₹8.0 lakh more than simply paying the higher EMI.
Your rights at a rate reset
RBI requires lenders, at the time of a rate reset on floating-rate loans, to:
- tell you clearly how the change affects your EMI and/or tenure;
- give you the option to increase the EMI, extend the tenure (within limits), or a mix of both;
- let you prepay all or part of the loan at any time;
- disclose all charges. Lenders may also offer a switch to a fixed rate, but since October 2025 they don't have to.
Check your loan statement after every reset. If your tenure has quietly grown, ask in writing to increase the EMI instead.
Still on an old MCLR or base-rate loan?
Older loans often pay noticeably more than new repo-linked loans. Ask your bank to switch you to its current repo-linked rate; there is usually a small conversion fee. If it won't match a good offer elsewhere, a balance transfer may be worth it.
Check your own loan
Enter your new rate in the home loan EMI calculator to see the new EMI, and use the reduce EMI or tenure calculator when you prepay. If switching banks looks attractive, check it with the balance transfer calculator.
Frequently asked questions
When will a repo rate cut reduce my home loan EMI?
For repo-linked loans, at your next rate reset, which banks must do at least once every three months. Many banks reduce the tenure by default rather than the EMI; ask if you prefer a lower EMI.
Is it better to reduce EMI or tenure when rates fall?
Keeping the EMI and shortening the tenure saves much more interest. Lower the EMI only if you need the monthly breathing room.
My bank extended my tenure when rates rose. What can I do?
Ask in writing to increase your EMI instead, or make a part-prepayment. RBI requires lenders to give you these options at a reset and to communicate changes clearly.