Switch to Repo-Linked Home Loans and Save Over ₹3 Lakh on EMIs
Still paying high home loan EMIs? Switch to a repo-linked home loan and save over ₹3 lakh. Find out how this one switch can drastically reduce your monthly payments and long-term costs.
Repolinked LoansMclrHome Loan EmisRbi Repo RateFinancial SavingsReal EstateJun 01, 2025
Repo-linked loans, also known as External Benchmark Lending Rate (EBLR), Repo Based Lending Rate (RBLR), or Repo Linked Lending Rate (RLLR), are directly tied to the Reserve Bank of India’s (RBI) repo rate. This means that when the RBI lowers the repo rate, your loan interest rate and EMIs follow suit, usually within three months. This faster rate transmission is a significant advantage over MCLR or base rate loans, which reset less frequently and often with lags.
If you’re still servicing a home loan on MCLR, base rate, or BPLR, switching to a repo-linked home loan could slash your EMIs and deliver long-term savings, financial experts say. Repo-linked loans are benchmarked to the RBI’s publicly available rate, making them more predictable and transparent. As of 2025, repo-linked home loans are typically cheaper than MCLR-based loans. Rates for top-tier borrowers hover between 8.10% and 8.35%, while many MCLR loans remain above those levels.
Switching can yield meaningful savings. Consider this:
- On a ₹50 lakh loan, a 0.5% drop in interest can save ₹1,595 monthly, or ₹3.82 lakh over 20 years.
- For a ₹40 lakh loan, that’s ₹1,255 per month saved, or over ₹3 lakh in total.
- Depending on the benchmark you switch from and loan size, annual savings range from ₹7,457 to ₹38,036.
Unlike MCLR, which depends on internal bank decisions, repo-linked loans are benchmarked to the RBI’s publicly available rate, making them more predictable and transparent. There may be small processing fees or charges for switching, but these are often offset by the long-term interest savings. Borrowers with good credit scores tend to get the best deals, so checking your credit profile is advised before switching.
Adhil Shetty, CEO of BankBazaar.com, was quoted as saying, “Borrowers paying 50 bps or more above the current market rates should consider switching to a repo-linked home loan to save on interest costs.”
By switching to a repo-linked home loan, you can take advantage of the RBI’s rate changes and enjoy lower EMIs and significant long-term savings. It’s a wise financial decision that can help you manage your home loan more effectively and reduce your financial burden.
Frequently Asked Questions
What is a repo-linked home loan?
A repo-linked home loan, also known as EBLR, RBLR, or RLLR, is a type of home loan where the interest rate is directly linked to the Reserve Bank of India’s (RBI) repo rate. When the RBI changes the repo rate, the interest rate on your loan and your EMIs adjust accordingly.
How much can I save by switching to a repo-linked home loan?
The savings can be significant. For example, on a ₹50 lakh loan, a 0.5% drop in interest can save you ₹1,595 monthly, or ₹3.82 lakh over 20 years. For a ₹40 lakh loan, the savings are ₹1,255 per month, or over ₹3 lakh in total.
What are the advantages of repo-linked home loans over MCLR-based loans?
Repo-linked loans offer faster rate transmission, meaning your interest rate and EMIs adjust quickly to changes in the RBI repo rate. They are also more predictable and transparent, as they are benchmarked to a publicly available rate, unlike MCLR, which depends on internal bank decisions.
Are there any costs associated with switching to a repo-linked home loan?
There may be small processing fees or charges for switching, but these are often offset by the long-term interest savings. It's advisable to check these costs with your bank before making the switch.
Who should consider switching to a repo-linked home loan?
Borrowers who are paying 50 basis points (0.5%) or more above the current market rates should consider switching to a repo-linked home loan to save on interest costs. Checking your credit profile is also recommended to ensure you get the best deals.
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