The Reserve Bank of India (RBI) is about to announce monetary policy on Wednesday. It is being expected that the Reserve Bank of India can cut the repo rate by up to 0.25 percent. This will also reduce the interest of your home loan and EMI will also decrease in the coming months. In such a situation, there is a benefit in understanding this trick related to home loan. A lot of money can be saved by repaying the EMI of home loan before time.
Interest burden will be reduced
Paying home loan before EMI time is always considered a smart step. Along with reducing the interest of your home loan, it also reduces the burden of EMI. Pre-payment of home loan reduces your principal amount, which also reduces your loan tenure.
Ceyil score will improve
The pre-payment of home loan does not reduce the burden and interest of your EMI. Rather, it also improves your CIBIL score. The CIBIL score is actually a measure of your ability to take a loan. It decides your credibility and based on this, banks decide to give you a loan. It is always considered good for CIBIL score to be above 750 points.
How much is the interest of home loan
As of April 2025, the interest rates of home loans of the country’s major banks SBI, Kotak Bank, HDFC Bank, ICIC Bank and other banks are between 8.25 percent to 10.25 percent. Now there may be a change in RBI’s repo rate tomorrow.
According to Mint’s news, Rishi Anand, MD and CEO of Aadhaar Housing Finance Limited, says that the pre-payment of the home loan can be financially decided. If your home loan is at floating interest rate, then pre-payment penalty is not available in such home loans.
The floating rate is actually the interest rate that varies over time. The floating rate is usually connected to the repo rate of the Reserve Bank of India. In such a situation, if the repo rate increases, then the interest of the home loan also increases and the repo rate also reduces the rate of your loan.
By the way, loan pre-payment does not mean just reducing the interest rate. It also strengthens your financial future.