How to Reduce EMI on an Existing Loan

There are three ways to reduce an EMI: lower the interest rate, reduce the amount you owe, or spread the loan over more years. In order of how much they usually save:

On a ₹40 lakh balance at 9% with 16 years left (EMI ₹39,381), every 0.25 percentage point off the rate cuts the EMI by about ₹600 and total interest by about ₹1.16 lakh. Check your own loan in the Home Loan EMI Calculator.

The quickest way to reduce your home loan interest rate is to ask your current lender to bring it in line with what it offers new borrowers. Banks usually agree for a one-time conversion fee, because the alternative is losing you to another lender.

• Compare your rate with your lender's current rate for new customers on its website
• Ask for a rate conversion (sometimes called a reset or switch) and the fee for it
• If your CIBIL score has improved since you took the loan, say so: lenders price loans by score

If your lender refuses, a balance transfer offer from another bank is your bargaining tool.

If your home loan is still on MCLR or base rate, switching to a repo-linked (external benchmark) rate usually lowers your rate and makes it move faster with RBI decisions, both down and up. Since October 2019, new floating-rate retail loans have had to use an external benchmark such as the repo rate, but many older loans were never moved.

Compare your current rate with the repo-linked rate the bank would give you after the switch, minus the conversion fee. The RBI raised the repo rate to 5.50% on 7 October 2026, so repo-linked rates are rising slightly now.

A home loan balance transfer moves your outstanding loan to another lender at a lower rate. The new lender pays off your old loan, and you pay EMIs to the new lender from then on.

Example: moving ₹40 lakh with 16 years left from 9% to 8.25% cuts the EMI from ₹39,381 to ₹37,586, saving ₹1,795 a month and about ₹3.45 lakh of interest over the remaining term. Compare that with the costs of moving: processing fee plus 18% GST, legal and valuation fees, and in some states stamp duty on the new mortgage. Compare two offers on total cost in the Loan Comparison Calculator.

Balance transfer charges usually include the new lender's processing fee (often up to 0.5% of the loan, plus 18% GST), legal and technical valuation fees, and in some states stamp duty on the new mortgage deed. There is no foreclosure charge from your old lender on a floating-rate loan taken by an individual.

A transfer is usually worth it when the rate gap is at least about 0.5 percentage points and many years are left. Some lenders waive the processing fee to win transfers, so ask.

To reduce the EMI on an existing loan with a part-prepayment, pay the lump sum and tell your lender to keep the tenure and lower the EMI. Most lenders cut the tenure instead unless you ask.

On a ₹30 lakh, 8.5%, 20-year loan, ₹2 lakh prepaid after 2 years lowers the EMI from ₹26,035 to about ₹24,224 if you keep the tenure. If you can afford the old EMI, cutting the tenure instead saves far more: about ₹6.23 lakh of interest against ₹1.91 lakh. See both options for your loan in the Loan Prepayment Calculator.

Yes, most lenders let you extend a home loan tenure on request, as long as the new end date stays within their age limit, usually 60 to 70. It is the easiest way to reduce the EMI and the most expensive.

On ₹40 lakh at 9%, extending from 16 to 20 years remaining cuts the EMI by ₹3,392 to ₹35,989 but adds about ₹10.76 lakh of interest. Use it only to get through a tight period, then prepay or shorten the tenure again when you can.

To reduce the EMI on an existing personal loan, transfer it to a lender offering a lower rate, part-prepay it, or extend the tenure. Personal loans are usually fixed-rate, so a prepayment or foreclosure charge may apply; check your Key Fact Statement.

Because personal loan rates (often 11–16%) are much higher than home loan rates, prepaying a personal loan with spare money saves more per rupee than prepaying a home loan. Work out your EMI in the Personal Loan EMI Calculator.

If the EMI itself is fine but the total is too much, reduce the burden by closing the costliest debt first and keeping all EMIs below about 40% of your take-home pay, the limit many lenders use.