SBI Home Loan Rate Cut: How Much You Will Save on EMI for Rs 20 Lakh to Rs 1 Crore Loans
New Delhi: In a move that brings relief to home loan borrowers, State Bank of India (SBI), the country’s largest lender, has reduced its home loan interest rates by 25 basis points (bps). This revision follows the Reserve Bank of India’s (RBI) 25 bps repo rate cut last week. Effective February 15, 2025, SBI’s External Benchmark-Based Lending Rate (EBLR) has been adjusted to 8.90% (comprising the 6.25% RBI repo rate plus a 2.65% spread).
With this adjustment, SBI’s home loan rates now range between 8.25% and 9.20%, depending on the borrower’s credit profile and loan tenure. The rate cut directly benefits both new and existing borrowers by reducing Equated Monthly Installments (EMIs) and total interest outgo over the loan tenure.
This article provides a detailed EMI comparison to illustrate the potential savings for borrowers with home loans ranging from Rs 20 lakh to Rs 1 crore over a 20-year tenure.
Understanding the Impact of the 25 bps Rate Cut
For a home loan borrower, even a small 25 bps reduction in interest rates translates into substantial savings over the loan tenure. The reduction in EMI depends on the loan amount, tenure, and interest rate differential.
A 25 bps cut means a shift in interest rate from 8.50% to 8.25%. This effectively lowers the EMI and reduces the total interest paid over the loan period.
To quantify these savings, let’s analyze loan amounts from Rs 20 lakh to Rs 1 crore over a 20-year repayment period.
SBI Home Loan EMI Savings Breakdown (20-Year Tenure)
| Loan Amount (Rs) | Previous EMI (8.50%) (Rs) | New EMI (8.25%) (Rs) | Monthly Savings (Rs) | Annual Savings (Rs) | Total Savings Over 20 Years (Rs) |
|---|---|---|---|---|---|
| 20,00,000 | 17,356.46 | 17,041.31 | 315.15 | 3,781.82 | 75,636.39 |
| 30,00,000 | 26,034.70 | 25,561.97 | 472.73 | 5,672.73 | 1,13,454.58 |
| 50,00,000 | 43,391.16 | 42,603.28 | 787.88 | 9,454.55 | 1,89,090.97 |
| 75,00,000 | 65,086.74 | 63,904.92 | 1,181.82 | 14,181.82 | 2,83,636.46 |
| 1,00,00,000 | 86,782.32 | 85,206.57 | 1,575.76 | 18,909.10 | 3,78,181.95 |
Key Takeaways from the EMI Reduction Analysis
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Significant Monthly Savings:
- Borrowers with a Rs 50 lakh loan will see a monthly EMI reduction of Rs 787.88, adding up to Rs 9,454.55 per year.
- A Rs 1 crore loan will lead to a monthly EMI drop of Rs 1,575.76, saving borrowers Rs 18,909.10 annually.
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Long-Term Financial Benefits:
- Over a 20-year tenure, borrowers of Rs 20 lakh will save approximately Rs 75,636, while those taking a Rs 1 crore loan will save close to Rs 3.78 lakh in total interest payments.
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Affordability Boost for Homebuyers:
- Lower EMIs enhance affordability, making it easier for prospective homeowners to enter the real estate market.
- Reduced borrowing costs also encourage existing home loan borrowers to consider prepayment strategies to close loans faster.
Revised SBI Home Loan Interest Rate Ranges
Following the 25 bps rate cut, SBI’s home loan interest rates now stand at:
- Minimum Rate: 8.25%
- Maximum Rate: 9.20%
- EBLR (External Benchmark-Based Lending Rate): 8.90%
Borrowers with higher credit scores and strong financial profiles may qualify for the lower end of the rate range, while others may be subject to slightly higher rates based on risk assessment.
Should You Consider Refinancing Your Home Loan?
With SBI’s new lower home loan rates, existing borrowers have an opportunity to explore loan refinancing (balance transfer) to reduce their EMIs further. Here’s what borrowers should consider:
- Existing Borrowers: If your current home loan is at a higher rate, consider negotiating with SBI for a rate revision or transferring your balance to another lender offering better terms.
- New Borrowers: If you are planning a home loan, this is an opportune moment to lock in a lower interest rate, reducing long-term interest costs.
- Prepayment Benefits: Lower EMIs also mean that borrowers can consider aggressive prepayment strategies to shorten the loan tenure and minimize total interest outgo.
