For homebuyers in Mumbai, selecting the right home loan is just as crucial as selecting the right property. With recent repo rate cuts by the Reserve Bank of India (RBI) in 2025, buyers are hearing a lot about two common types of interest rate systems: Repo-Linked Lending Rate (RLLR) and Marginal Cost of Funds Based Lending Rate (MCLR). But which one is better?
Let’s break it down to help you make the most informed financial decision before you invest in your dream home with Pilani Realty.
- Operating costs
- Tenure premium
- Marginal cost of funds
- CRR (Cash Reserve Ratio)
- Quick transmission of RBI rate cuts.
- Transparent and easy-to-understand linkage.
- Lower interest burden during rate reduction cycles.
- Higher volatility in EMIs.
- Sudden increase in EMIs if RBI hikes repo rate.
- Under RLLR, you might save up to ₹1,500–₹2,000 per month in EMI versus MCLR-based loans.
- RLLR for buyers in today’s low-rate environment.
- MCLR if you're buying with a long-term view and prefer EMI stability.
Understanding MCLR
MCLR is the internal benchmark rate set by banks to determine lending rates. Introduced in 2016, MCLR takes into account factors like:
If you're considering buying a home in Mumbai, you could see monthly savings ranging from ₹1,000 to ₹3,000 or more depending on your loan amount and tenure.
Pros of MCLR:
Predictability: Rate resets usually every 6 or 12 months.
Stability: Less frequent changes in EMI.
Cons of MCLR:
Slower rate transmission when RBI cuts rates.
Slightly higher rates in a falling interest rate environment.
Understanding Repo-Linked Lending Rate (RLLR)
Introduced in 2019, the RLLR is directly linked to the repo rate set by the RBI. When the RBI changes the repo rate, RLLR-based home loans reflect this change almost immediately (within 3 months).
Pros of RLLR:
Cons of RLLR:
Mumbai Market Context in 2025
The RBI’s repo rate is currently at 5.5% after a cumulative 100 bps cut this year. This environment strongly favors RLLR-based loans, as banks are passing on the reduced rates swiftly to borrowers. Mumbai, being one of India’s most expensive real estate markets, offers significant monthly savings for borrowers who choose RLLR over MCLR.
Let’s say you take a loan of ₹70 lakh:
Which One Should Mumbai Buyers Choose?
For most first-time homebuyers, RLLR is the smarter option right now in 2025. The quick response to rate cuts helps reduce borrowing costs and makes premium homes more affordable. However, if you're risk-averse or prefer consistent EMIs, MCLR may still appeal to you.
Pilani Realty’s Advisory
At Pilani Realty, we go beyond offering you luxury homes in Mumbai’s prime locations. Our experts also help you understand your financing options, comparing RLLR and MCLR loans to help you choose what's best for your goals.
We recommend:
Final Thoughts
In the ever-changing real estate market of Mumbai, choosing the right financing plan can have a massive impact on your affordability and ROI. With repo rates trending downward in 2025, now is the time to consider an RLLR-based loan and explore your dream home.
To make the most of this opportunity, visit Pilani Realty, and speak to our advisors today. Your future-ready home in Mumbai is just a few smart choices away.
Final Thoughts
The RBI’s 2025 rate cut is more than a policy decision—it’s a signal. A signal that the time is ripe to invest in your dream home. For Mumbai homebuyers, where the stakes and values are both high, this can translate into huge long-term gains.
At Pilani Realty, we’re here to help you navigate this opportunity with the right project, location, and loan advisory support.
