The recent repo rate cut of 25 basis points in February 2025 has created a buzz in the home loan market. While some banks have slashed their interest rates to attract new customers, others remain stubbornly high. If your bank hasn’t passed on the benefits of this repo rate cut, it might be time to consider a home loan balance transfer.
In this blog, we’ll explain why banks react differently to a repo rate cut, how you can save big with lower rates, and why a balance transfer might be the smartest financial move you make this year.
What Is a Repo Rate Cut and Why Does It Matter for Your Home Loan?
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. When the RBI cuts this rate, borrowing becomes cheaper for banks, encouraging them to lend more by lowering home loan interest rates.
In February 2025, the RBI reduced the repo rate for home loans by 25 basis points, triggering a wave of rate reductions across leading banks. But here’s the catch: not all banks pass this benefit to their customers.
Why does this matter to you?
- Lower repo rates should ideally mean lower EMIs.
- If your bank doesn’t reduce rates, your EMIs remain higher while others pay less.
Suggested Read: RBI Repo Rate Cut – What Does it Mean for Homebuyers
How Much Can a Repo Rate Cut Save You?
Even a small reduction in interest rates can lead to significant savings. Here’s a simple example:
| Loan Amount | Interest Rate Before | Interest Rate After | Tenure | EMI Savings |
|---|---|---|---|---|
| ₹50 lakhs | 9.0% | 8.5% | 20 years | ₹2,000/month |
Over 20 years, that’s a whopping ₹480,000 saved! Now imagine if you transferred your home loan to a bank offering this reduced rate.
Case Study: Home Loan Balance Transfer Savings
Let’s take a real-life scenario to understand the impact of a balance transfer after a repo rate cut:
Mr. Arjun Mehta has a home loan of ₹80 lakh with an interest rate of 9% for a tenure of 20 years. After the recent repo rate cut, another bank offers him an interest rate of 8.15%. He decides to transfer his loan.
Before Home Loan Balance Transfer:
| Category | Details |
|---|---|
| Interest Rate | 9% |
| Loan Amount | ₹80,00,000 |
| Tenure | 20 years |
| EMI | ₹71,898 |
| Total Interest Paid | ₹92,55,474 |
| Total Repayment | ₹1,72,55,474 |
After Home Loan Balance Transfer:
| Category | Details |
|---|---|
| Interest Rate | 8.15% |
| Loan Amount | ₹80,00,000 |
| Tenure | 20 years |
| EMI | ₹68,232 |
| Total Interest Paid | ₹83,75,728 |
| Total Repayment | ₹1,63,75,728 |
Savings from the Balance Transfer:
- Monthly EMI Savings: ₹3,666
- Total Interest Savings Over 20 Years: ₹8,79,746
This case study clearly shows how a seemingly small interest rate reduction can lead to significant savings over time. By switching to a bank offering lower interest rates, Mr. Mehta saves ₹3,666 every month and nearly ₹8.8 lakh in total interest.
Pro Tip: Use our Home Loan Balance Transfer Calculator and calculate how much you’ll save on your home loan now.
Also Read: Top 5 Banks for Home Loan Balance Transfer
Switch your Home Loan and Save Lakhs – Transfer Today for Maximum Savings!
How to Transfer Your Home Loan After a Repo Rate Cut
Compare offers and rates from top banks
- Compare Interest Rates: Check the latest home loan repo rates across banks.
- Calculate Savings: Use an online EMI calculator to determine potential savings.
- Check Processing Fees: Some banks charge fees for loan transfers.
- Apply for Balance Transfer: Submit the required documents.
- Finalize the Transfer: Once approved, your new lender will settle the previous loan.
Pro Tip: Banks with aggressive marketing after a repo rate cut often offer discounts on processing fees—don’t hesitate to negotiate!
Also Read: Bank Of Baroda Slashes Home Loan Rates to 8.15%p.a*
When Should You Transfer Your Home Loan?
- Your Bank Hasn’t Lowered Rates: After a repo rate cut, check if your bank has adjusted its rates.
- Competitor Banks Offer Better Rates: Explore the market.
- Long Tenure Remaining: Transferring makes more sense if you have a long repayment period left.
- High Outstanding Loan Amount: The higher your loan amount, the more you save.
Read More: Right Time for a Home Loan Balance Transfer
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Home Loan Interest Rates by Top Banks
Compare top home loan options to make an informed decision for your home loan balance transfer.
| Bank | Up to Rs. 30 Lakh | Above Rs. 30 Lakh to Rs. 75 Lakh | Above Rs. 75 Lakh |
|---|---|---|---|
| SBI Bank | 8.00% p.a. onwards | 8.00% p.a. onwards | 8.00% p.a. onwards |
| HDFC Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| LIC Bank | 8.50% – 10.35% p.a. | 8.50% – 10.55% p.a. | 8.50% – 10.75% p.a. |
| ICICI Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| Kotak Mahindra Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| Punjab National Bank | 8.50% – 11.05% p.a. | 8.50% – 11.05% p.a. | 8.50% – 11.05% p.a. |
| Bank Of Baroda | 8.40% onwards | 8.40% – 10.65% p.a. | 8.40% – 10.90% p.a. |
| Bajaj Housing Finance | 8.50% p.a. onwards | 8.50% p.a. onwards | 8.50% p.a. onwards |
| Axis Bank | 8.75%-10.30% p.a. | 8.75%-10.30% p.a. | 8.75%-10.30% p.a. |
| Bank of India | 8.40% p.a onwards | 8.40% p.a onwards | 8.40% p.a onwards |
| TATA Capital | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
Home Loan Processing Fees by Top Banks
| Bank | Home Loan Processing Fee |
|---|---|
| SBI (State Bank of India) | 0.35% of the loan amount (min ₹2,000, max ₹10,000) + GST |
| HDFC Bank | Upto 0.50% of the loan amount or Rs. 3300/- whichever is higher |
| ICICI Bank | 0.50% of the loan amount (min ₹3,000, max ₹5,000) + GST |
| Axis Bank | 1% of the loan amount or ₹10,000 (whichever is lower) |
| Kotak Mahindra Bank | Upto 2% of loan amount (plus taxes and any other applicable statutory dues) |
| Bajaj Housing Finance | Up to 4% of the loan amount |
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Why choose Credit Dharma? We provide:
- Lowest Interest Rates: Save more with every EMI.
- Maximum Funding: Get up to 100% funding for your dream home.
- Simple & Digital Process: No tedious paperwork or branch visits.
- Expert Guidance: Lifetime support from our team of specialists.
Compare, choose, and secure the best Home Loan Balance Transfer offer with Credit Dharma — your home loan journey starts here!
Frequently Asked Questions
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends funds to commercial banks, influencing home loan interest rates. As of February 7, 2025, the RBI reduced the repo rate by 25 basis points to 6.25%.
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends funds to commercial banks, influencing home loan interest rates. As of February 7, 2025, the RBI reduced the repo rate by 25 basis points to 6.25%.
Following this, the State Bank of India (SBI) reduced its home loan interest rates by 25 basis points to 8.25%, effective from February 15, 2025.
Transferring your home loan balance to another lender can be beneficial if it offers a lower interest rate, potentially reducing your EMI or loan tenure.
Banks such as HDFC, ICICI Bank, and Axis Bank offer competitive home loan balance transfer options.
HDFC Home Loan
SBI Home Loan
