Why your EMI moved when you did nothing, and how to decide between the options your bank is offering.
Since 2019 most home loans in India are externally benchmarked, usually to the RBI repo rate. When the repo moves, your rate moves — typically at the next reset date rather than immediately.
Banks quote you repo plus a spread. The repo is the same for everyone; the spread is where your credit profile, income stability and negotiating position show up. A 25 basis point improvement in spread on a ₹60 lakh, 20-year loan is worth roughly ₹2.3 lakh over the life of the loan.
Fixed-rate products in India are rarely fixed for the full tenure — read the reset clause. A "fixed" loan that resets after three years is a floating loan with a delay.
The lever most borrowers ignore is prepayment. On a floating loan there is no prepayment penalty for individual borrowers, and a single annual bonus routed to principal in the early years cuts years off the tenure.
This article is general information, not financial, legal or investment advice. Property markets move and individual circumstances differ. Please take professional advice on your own situation before acting on anything here.
