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The RBI has announced a reduction of 0.50 basic point in the repo rate at the MPC meeting held on Friday. Due to which the general public of the country has got a lot of relief. The central bank had earlier cut a basic point of 0.25–0.25 in the quarter of the month of February to April. Due to these three deductions, the repo rate has been cut by 1 percent this year. Most home loan -taking floating rates lend from banks, most of which are linked to the repo rate of home loan interest rate. This is the reason that any deficiency in the repo rate means that the interest rate of home loan can also decrease a similar decrease.

Whenever there is a decrease in the interest rate of home loan, the bank gives 2 options to those taking loans or they can reduce EMI by making no changes in the tenure. Also, reduce the tenure and keep EMI there. A lone -taking person can save the interest in both superators, but the quantity of saving is different in both methods. If you reduce EMI after reduction in interest rate, it will not only give your EMI to your EMI but can also give a lot of cuts in your total interest.

However, your real saving depends on whether you reduce your EMI or keep stable and shorten the loan tenure. Because now banks will start reducing the interest of your home loan, that is why most home loans are willing to know how much saving they can get after cuts. If you have taken a loan of up to Rs 50 lakh, then you can save more than 7 lakh rupees. Let us tell you how?

How much will saving

Suppose you had taken a loan of Rs 50 lakh at the rate of 9.5 percent for 20 years, then your loan EMI can be 46,607. The entire loan of 20 years was Rs 61,85,574 lakh and the total payment was coming out Rs 1,11,85,574. In the current year, the interest rate has been cut by 1 percent. Which means that now according to the rate of home loan, it has come to 8.5 percent, so your loan EMI will be Rs 43,391. The total interest rate will come down to Rs 54,13,879. Total payment will be Rs 1,04,13,879. In this way, you will save Rs 7.17 lakh on the entire loan.

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How much saving will be when the loan tenure is low

Also, if you reduce the tenure instead of reducing EMI, then you can benefit even more. If you continue to pay the same EMI even after the fall in interest rate, then the tenure of your loan will be reduced by 3.16 years. These options on a loan of 50 lakh rupees for 20 years. You can save Rs 17.65 lakh at interest rate. Which means that you can save more than 10 lakh rupees through this option.