Before you buy: stress-test your home loan EMI
The EMI schedule you are handed holds today's rate flat for the whole loan. Floating rates don't stay flat. Between 2022 and 2023 the repo rate rose 2.5% in nine months, and it rose another 0.25% on 7 October 2026, to 5.50%.
The same loan, if rates rise 2%
| Rs 50 lakh, 20 years | Rate | EMI |
|---|---|---|
| What the bank's chart shows | 8.15% | Rs 42,290 |
| To finish on time after a 2% rise | 10.15% | Rs 48,749 |
| Difference | Rs 6,459 a month |
Three things to do before signing
1. Set aside the difference. Put about Rs 6,500 a month into a separate deposit from the start. If rates rise it covers the higher EMI; if they don't, it becomes a part-payment.
2. Negotiate the spread. The spread over repo is fixed at signing for the life of the loan. 0.25% lower on this loan saves about Rs 1.9L over 20 years.
3. Confirm it is EBLR. A new floating-rate home loan from a bank should be linked to the repo rate, so RBI changes reach you within a quarter, in both directions. Ask for that in writing.
4. If the flat is still being built, ask how the rate is re-set while only part of the loan has been paid out, and whether your tenure counts from the first payout or from possession. You pay interest only until the full EMI starts. Open the buyer check and choose Under construction.