Personal Finance
RBI rate cycle in 2026: what home-loan EMIs will look like
With the repo rate trending lower, floating-rate borrowers are seeing meaningful EMI relief. Should you switch, prepay or refinance?
The RBI has moved into an easing cycle, and repo-linked home loans have started re-pricing downward. If your loan is on MCLR or base rate, you're likely paying 60–120 bps more than you need to.
Switch from MCLR / base rate to EBLR
External Benchmark-Linked Rate (EBLR) loans re-price faster and transparently. Most banks allow a one-time switch for a small conversion fee — the payback is often under 6 months.
Prepay vs invest
Simple test: if your post-tax home-loan rate is higher than what a debt fund or FD will earn you post-tax, prepay. If equities are your alternative, prepay only up to your emotional risk limit.
Watch out for
- Prepayment penalties on fixed-rate loans (floating rate has none for individuals)
- Section 24(b) interest deduction — prepaying too aggressively may waste the ₹2L cap benefit
- Insurance bundled into the loan EMI — often overpriced, worth unbundling
Run the numbers on our EMI calculator, then talk to us if it changes your tax picture.