Your home loan EMI is probably higher than it needs to be.

A rate reset is when you ask your existing bank to re-price your loan to their current EBLR offer. It is the cheapest option — you typically pay a conversion fee of 0.10% to 0.25% of the outstanding principal, and there is no new property valuation, legal work, or MOD charges. A balance transfer is when you move the loan to a different lender that is offering a lower rate. It costs more upfront (fresh processing fee, legal/valuation charges, often a small MOD fee) but usually unlocks a bigger rate drop. Rule of thumb: try the rate reset first, then use the reset quote to negotiate, then move to a balance transfer only if the math still works.

Not on a floating rate home loan. RBI has prohibited foreclosure and prepayment charges on floating rate home loans to individual borrowers since 2019. Your bank cannot charge a penalty when you close the loan through your own funds or by refinancing elsewhere. Fixed rate home loans are a different story — prepayment charges of 2–4% of outstanding principal are still allowed. If your bank attempts to levy a foreclosure fee on a floating rate loan, you can escalate to the banking ombudsman.

EMI (Equated Monthly Installment) is the fixed amount you pay every month toward your home loan. It is calculated using the formula EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1), where P is the principal, r is the monthly interest rate, and n is the total number of installments. Our calculator handles this automatically — enter your loan amount, rate, and tenure.

The repo rate is the rate at which RBI lends to banks (currently 5.25% as of April 2026). EBLR (External Benchmark Lending Rate) is directly linked to the repo rate plus a spread — most new home loans are on EBLR, which means they reset within a day or two of RBI action. MCLR (Marginal Cost of Funds Based Lending Rate) is an older internal benchmark that resets slowly and reflects changes only after several months. Since October 2019, RBI mandates all new floating rate retail loans use an external benchmark. If you took your loan before 2019, it is almost certainly still on MCLR — and you are leaving money on the table.

Banks typically lend 60–80% of the property value (Loan-to-Value ratio). Eligibility depends on monthly income, existing EMIs and liabilities, credit score (750+ is ideal), age, employment stability, and the property itself. As a rule of thumb, total EMIs including the new home loan should not exceed 50–60% of net monthly income.

Under the current regime, Section 24(b) allows a deduction of up to ₹2 lakh per year on interest paid for a self-occupied property, and Section 80C allows a deduction of up to ₹1.5 lakh per year on principal repayment. Section 80EEA provides an additional ₹1.5 lakh deduction on interest for first-time buyers of affordable housing. These benefits can save ₹4–5 lakh in taxes over a full loan tenure.

CIBIL scores of 800+ get the best advertised rates. Scores between 750 and 799 get rates around 10–25 bps higher. Between 700 and 749, banks typically add 50–100 bps. Below 700, many lenders decline or push you to NBFCs at significantly higher rates. Pay existing EMIs and credit card bills on time, keep credit utilization below 30%, and avoid new credit inquiries in the three months before applying.