Home Loan Masterclass · Part 14 · Home loans · 8 min read · November 2026
The repo rate went up. Your lender may have already chosen how you pay for it.
If your EMI did not change after RBI's October hike, that is not necessarily good news. On a ₹50 lakh loan with 20 years left, keeping the EMI the same adds 13 months and about ₹3.5 lakh of interest. Raising it by ₹795 a month avoids all of that.
- RBI raised the repo rate to 5.50% on 7 October 2026. The rise reaches a floating loan on that loan's next reset date, so your timing may differ from your neighbour's.
- You pay for it in one of two ways: a higher EMI, or more EMIs. The second feels painless and costs far more.
- The longer your remaining tenure, the worse the extension gets. With 10 years left it is modest. With 25 years left it is severe.
- The choice is yours. RBI's rules require your lender to offer it, and to tell you if the EMI or tenure changes.
- Check your quarterly statement. The number of EMIs left is where a silent extension shows up.
What happened, and when it reaches you
On 7 October 2026 RBI raised the repo rate by 0.25 percentage points, from 5.25% to 5.50%, and moved its stance to "calibrated tightening". The next policy decision is due at the meeting of 2 to 4 December. Nobody can tell you what it will be, so the sums here use the rise that has already happened.
A floating rate is a benchmark plus your lender's spread. The hike moves the benchmark, not the spread. But the loan does not reprice on the day of the announcement. It waits for its own reset date.
- Repo-linked loans reset at least once every three months, so October's hike should arrive by about January.
- MCLR-linked loans reset on the cycle written in your agreement, often once a year. The rise may take much longer to appear, and it depends on how your lender moves its MCLR.
Your sanction letter names your benchmark and reset frequency. If you do not have it, your lender's app or the branch can tell you both, along with the next reset date. We have covered how the benchmark and spread work separately.
The same rise, paid three ways
Take ₹50 lakh outstanding at 8.50% with 240 EMIs left. The rate rises to 8.75%.
| What you do | EMI | EMIs left | Interest from here |
|---|---|---|---|
| Before the rise | ₹43,391 | 240 | ₹54.14 lakh |
| Raise the EMI | ₹44,186 | 240 | ₹56.05 lakh |
| Keep the EMI, extend the tenure | ₹43,391 | 253 | ₹59.53 lakh |
| Prepay ₹89,891 once, keep EMI and tenure | ₹43,391 | 240 | ₹55.04 lakh |
The rise itself costs ₹1.91 lakh more interest if you raise the EMI. Extending the tenure costs ₹5.39 lakh more. The difference, ₹3.49 lakh, is the price of not paying ₹795 extra a month. The prepayment line shows a third route: a single payment now that cancels the rise completely.
The tool for this
Enter your balance, rate and EMIs left to see all three routes side by side.
Why the tenure route gets worse the longer you have left
In the early years most of each EMI is interest. When the rate rises, more of the EMI goes to interest and less to principal, so the balance falls more slowly. If the EMI stays fixed, the extra months pile up at the far end. Here is the same ₹50 lakh at 8.50%, with different tenures left:
| EMIs left | Rate rises 0.25 | Rate rises 0.50 | Rate rises 1.00 |
|---|---|---|---|
| 120 (10 years) | 3 more EMIs | 5 more | 10 more |
| 180 (15 years) | 6 more | 12 more | 27 more |
| 240 (20 years) | 13 more | 28 more | 69 more |
| 300 (25 years) | 25 more | 59 more | 218 more |
Look at the last row. With 25 years left, a one-point rise would stretch the loan by more than 18 years if the EMI stayed put. Rate moves stack up in this way across several resets, which is why a loan that looks unchanged today can be far longer than the one you signed. These larger rises are illustrations, not forecasts.
There is a floor. If the rate rises enough, a fixed EMI stops covering even the month's interest, and the balance would start to grow. RBI's rules do not allow that. The lender must not extend the tenor to a point where this happens, so the EMI has to rise.
What RBI's rules give you
These come from RBI's August 2023 circular on resetting floating rates, as updated from 1 October 2025. They cover equated instalment loans from banks, NBFCs and housing finance companies.
- A choice at reset. You can opt for a higher EMI, a longer tenor, or a mix of the two.
- Prepayment at any point, in part or in full. On floating-rate home loans to individuals, RBI bars foreclosure charges.
- A statement every quarter showing principal and interest recovered, the EMI, the EMIs left and the annual rate.
- Notice of change. The lender must tell you when the EMI or tenor changes because of a benchmark move.
- A fixed-rate switch is now the lender's option, not your right. The 2025 update changed this. Where it is offered, charges apply and must be disclosed.
What to do this month
- Find your reset date and benchmark. This tells you when the rise will land.
- Pull your latest statement and write down the EMIs left. Compare it with your next statement after the reset. If the number went up, your tenure was extended.
- Work out the extra EMI. On most home loans a 0.25 point rise adds about ₹130 to ₹175 a month per ₹10 lakh of balance, depending on the tenure left.
- If you can afford it, ask for the higher EMI in writing. A branch or the lender's service channel can tell you the form it needs. A small lift now does more than a large prepayment years later.
- If your budget is tight, let the tenure run for now, and clear the extension later with a part-prepayment. A bonus or an FD maturity works well for this.
- Check where the tenure ends. Lenders set age limits, so an extension can run into your retirement. Ask what the new closing date is.
- Look at your spread while you are at it. If it is high, repricing or a balance transfer could save more than this rise costs. Run Spread Check first.
Written at the MoneyClarityTech desk — by a working retail-credit professional in Indian banking who reads loan files, credit reports and bank statements every working day. Patterns from hundreds of real cases; every identifying detail removed. More about MoneyClarityTech →