Banks rarely lower the rate on an old home loan on their own. A clear written request gives your bank a reason to act and gives you a record if you need to follow up. This page explains what to ask for, what to keep ready, and gives a sample letter you can copy, plus short follow-up messages.
What should I ask my bank for?
Be specific. A vague "please reduce my rate" is easy to ignore. Ask for one or more of these:
- A lower spread. On a floating-rate loan, your rate is a benchmark plus a margin called the spread. Ask the bank to bring your spread down to what it offers new borrowers with a similar profile. Banks often call this a "conversion" or "switch" and charge a one-time fee.
- A move to a repo-linked rate. If your loan is linked to MCLR (marginal cost of funds based lending rate, the bank's internal rate) or the older base rate, ask to move to the bank's external benchmark rate, usually linked to the RBI repo rate. RBI rules say eligible floating-rate term loans that can be prepaid without charges can switch without any charges or fees except reasonable administrative or legal costs. The final rate should match the rate for a new loan of the same category, type, tenor and amount.
- The fee in writing, including taxes, and a waiver or reduction if possible.
- Your choice of lower EMI or shorter tenure. EMI means equated monthly instalment, your fixed monthly payment. Tenure is the number of months left.
- Written confirmation of the new rate, spread, benchmark and next reset date.
What details should I keep ready before writing?
- Loan account number and branch
- Amount outstanding and months left (from your latest statement)
- Current rate, the benchmark it is linked to, and the spread, if shown
- Your current credit score. A CIBIL score is a credit score from TransUnion CIBIL that ranges from 300 to 900. You can get one free full report a year from each credit bureau.
- Any written offer from another lender
- What the cut is worth in rupees each month
To work out the last point, use the standard EMI formula: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the amount outstanding, r is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the months left. For example, on ₹42,00,000 with 216 months left, the EMI at 9.40% is ₹40,386 and at 8.50% it is ₹38,029. That is ₹2,357 a month, or ₹5,09,112 over the remaining tenure. A figure like this makes your request concrete.
Sample letter to reduce your home loan interest rate
Copy this, replace the text in square brackets, and send it by email to your bank's home loan service address or hand it in at your branch against a receipt. Keep a copy.
To: The Branch Manager / Home Loan Service Team, [Bank name], [Branch]
Subject: Request to reduce interest rate on home loan account [loan account number]
Dear Sir/Madam,
I hold home loan account [number] with your bank, sanctioned on [date]. The amount outstanding is ₹[amount] with [months] months remaining. My current rate is [rate]%, linked to [repo rate / MCLR / base rate] [with a spread of [spread]%].
I have repaid regularly, and my current credit score is [score]. I note that your bank offers new home loans to borrowers with a similar profile at [rate]%. [I have also received a written offer from [lender] at [rate]%.]
I request you to:
- Reduce the rate on my loan to your current rate for a borrower with my profile, by lowering the spread;
- [If on MCLR or base rate:] Move my loan to your external benchmark (repo-linked) rate, as permitted under RBI's directions on interest rates on advances, charging only reasonable administrative or legal costs;
- Tell me in writing the total fee, including taxes, and waive or reduce it if possible;
- Confirm in writing the new rate, benchmark, spread and next reset date, and keep my EMI the same so that the tenure reduces [or: reduce my EMI and keep the tenure the same].
I would be grateful for a reply within seven working days.
Yours faithfully,
[Name], [Registered mobile number], [Registered email]
Short version for email, app or chat
"Hello, my home loan [account number] is at [rate]%, linked to [benchmark]. Your current rate for my profile appears to be [rate]%. Please share the conversion fee and process to move my loan to your current rate, and to your repo-linked rate if my loan is on MCLR or base rate. Please confirm the new rate in writing. Thank you, [Name]."
What if my bank does not reply?
Follow up on day 3 and escalate on day 7. Short messages work best:
- Day 3 reminder: "Following up on my request dated [date] to reduce the rate on home loan [account number]. Please share the fee and the new rate. Thank you."
- Day 7 escalation: send to the bank's grievance redressal officer or principal nodal officer, whose contacts are usually listed on the bank's website. "My request dated [date] for a rate review on home loan [account number] has had no reply. Please look into it and respond in writing."
The RBI Ombudsman is for service complaints, not for setting your rate. Under the Reserve Bank - Integrated Ombudsman Scheme, 2026, in force from 1 July 2026, you must first complain to the bank. You can approach the Ombudsman if there is no reply within 30 days, or if you are not satisfied with the reply. Matters relating to a lender's commercial judgement or decision cannot be taken up, and a refusal to cut your rate may be treated as one. So the Ombudsman is better suited to problems such as no response, or a charge that was not disclosed, than to forcing a lower rate.
How might the bank reply, and what can I do next?
| Bank's reply | Your next step |
|---|---|
| Offers a lower rate for a fee | Divide the fee by the monthly EMI saving. If it pays back in a few months, it is often worth taking. Ask for the confirmation in writing. |
| Offers a smaller cut than asked | Share a written offer from another lender and ask again. |
| Says no | Compare a balance transfer to another lender, after all costs. |
| No reply | Send the day-3 and day-7 messages above, then use the bank's grievance channel. |
The bank decides the rate, so a letter is not a guarantee. It costs nothing and creates a record. Note that RBI raised the repo rate to 5.50% on 7 October 2026, from 5.25%, so repo-linked loans may rise at their next reset. A lower spread still keeps your rate below what it would otherwise be.
Do it in 10 minutes, free
LowerMyEMI fills in this letter for you from your loan details, including the MCLR or base rate paragraph if it applies. It also drafts one email per lender to collect competing offers, and has the day-3 reminder and day-7 escalation texts ready. You send everything from your own email. Use the rate change calculator to see what the new rate does to your EMI or tenure before you reply to the bank.