If you’re planning to take a home loan, this update matters.
The RBI has changed the rules for floating-rate loans, which could make borrowing cheaper in the future.
The biggest change is that banks can now reduce your loan interest as soon as your credit score improves.
You no longer have to wait three long years for a review.
These new rules give faster relief to customers whose credit scores have recently gone up.
How Banks Decide Your Loan Interest
When a bank gives a loan, the final interest rate is based on two parts.
The first is an external benchmark like the RBI repo rate or T-bill yield.
The second part is the bank’s spread, which covers risk and operational costs.
Under the new rules, banks can now revise this spread immediately.
If your credit score improves during your loan period, the bank can reduce the spread right away, giving you a lower interest rate without delay.
Earlier, banks reviewed spreads only once every three years.
That lock-in has now been removed.
How You Can Get Your Rate Reduced
To benefit from these rules, you need to monitor your credit score regularly.
If your score rises, you can approach your bank and request a rate cut.
The bank will check your updated credit profile.
If everything checks out, they may reduce the spread, lowering your interest rate, or they may shorten your loan tenure.
Either way, the savings go straight to you.
Home loans are usually long-term, and even a 0.25% interest cut can save you thousands every month.
A higher credit score can mean even bigger savings.
Existing Customers Also Get Equal Benefit
Under RBI’s IRRA policy, existing borrowers must take the initiative to request a rate cut.
Earlier, only new customers got immediate benefits, while existing customers had to wait around three years for a spread review.
With the new rules, everyone is on equal footing.
If your credit score improves, you can ask for a lower rate right away instead of waiting years.
