RLLR, RBLR or MCLR: Which Home Loan is Best in 2025?

Confused about RLLR, RBLR or MCLR? Here’s how these home loan rates work, how they reset, and which is best for you under new RBI rules in 2025.

RLLR, RBLR or MCLR: Which Home Loan is Best in 2025?

If you have a home loan or are planning to take one in 2025, you must have come across terms like RLLR, RBLR, or MCLR. Many borrowers find these confusing — and no wonder! After all, the interest rate on your loan directly decides your EMI burden, your interest savings, and how quickly you can become debt-free.

In this detailed post, let’s break down:

• What RLLR, RBLR, and MCLR actually mean,
• How they work and reset,
• Which one might be best for you,
• What the latest RBI guidelines say,
• And whether it makes sense to switch.

First, Why Do Home Loan Rates Keep Changing?

Unlike fixed deposits, home loan rates are usually floating — meaning they go up or down depending on the economy and RBI’s Repo Rate. The Repo Rate is the rate at which RBI lends money to banks. When RBI cuts the Repo Rate, banks’ cost of funds reduces — so ideally, your home loan rate should also fall. (Refer this article for more clarity (RBI Repo Rate History from 2000 to 2025)

However, banks don’t always pass on the benefit immediately. That’s why the RBI introduced rules to link retail loans like home loans to external benchmarks, mainly the Repo Rate. This led to products like RLLR and RBLR becoming popular.

What is RLLR (Repo Linked Lending Rate)?

RLLR is short for Repo Linked Lending Rate.

How it works:

• Your interest rate = RBI Repo Rate + Bank’s Spread
• If the Repo Rate changes, your home loan rate must change too.
• Most banks reset the rate quarterly. So every 3 months, your loan rate adjusts based on the current Repo.

Example:

• Suppose the RBI Repo Rate is 6.50%
• Your bank’s spread is 2% (this covers the bank’s cost, profit, risk etc.)
• So, your home loan rate is 6.50% + 2% = 8.50%

If RBI cuts the Repo by 0.50%, your rate drops to 8% at your next reset date.

The spread is fixed for your loan — it won’t change unless you negotiate it during refinancing or balance transfer. Almost every major bank today offers RLLR-based home loans — SBI, Kotak Mahindra Bank, Axis Bank, HDFC Ltd., ICICI Bank, etc. Most new retail home loans are now on RLLR.

What is RBLR (Repo Based Lending Rate)?

RBLR stands for Repo Based Lending Rate — it’s similar to RLLR but with a twist.

How it works:

• Your loan rate = RBI Repo Rate + Bank’s Spread
• But here, the spread may depend on your credit score (CIBIL score) and risk profile.
• It also usually resets quarterly.

Example:

• Suppose the Repo Rate is 6.50%.
• If your CIBIL is excellent (say, above 750–800), your spread may be 2%.
• So your home loan rate is 8.50%.

However, if your credit score is lower (say 700), the bank might increase the spread to 2.5% or 3%. So you could end up with a higher rate even if the Repo falls.

Bank of Baroda (BOB) is the most well-known bank that uses RBLR for retail home loans. Bank of India (BOI) and some other PSUs also offer similar Repo-linked but risk-based lending.

In simple way, we can tabulate the same as below.

Aspect	RLLR	RBLR
Linked to Repo?	Yes	Yes
Spread	Fixed	Depends on credit score, can vary
Reset frequency	Usually quarterly	Usually quarterly
Popular banks	SBI, Kotak, Axis, HDFC	BOB, BOI
Flexibility	More predictable	Can vary person-to-person

So, RLLR is more transparent — what you see is what you get. RBLR can reward good credit scores but penalise weaker profiles.

What is MCLR (Marginal Cost of Funds based Lending Rate)?

Before the RBI made Repo-linked lending mandatory for retail loans, most loans were linked to MCLR.

How it works:

• The MCLR is set by the bank based on its internal cost of funds.
• The rate has a spread added by the bank.
• Banks decide when to pass on the benefit of Repo cuts — so your rate might not drop immediately.
• Reset frequency is usually annual or semi-annual.

Example:

• Bank’s MCLR is 8%
• Spread is 0.50% ? Home loan rate = 8.50%
• If the Repo drops, the bank might not reduce MCLR immediately.

Who still has MCLR?
Many older loans are still on MCLR. Even today, some car or personal loans might be on MCLR. But for new retail home loans, banks now push RLLR/RBLR.

How Do These Rates Reset?

RLLR/RBLR:

• Most banks reset quarterly.
• Example: SBI resets on the 1st of every quarter — April 1, July 1, October 1, January 1.
• The Repo Rate on the last RBI policy before reset is what matters.

MCLR:

• Typically reset annually — so any benefit/damage hits only once a year.
• Less flexible, slower to adjust.

Should You Switch from MCLR to RLLR or RBLR?

Many people with older home loans are paying higher interest because MCLR doesn’t drop fast. If you have an old MCLR loan, check:

• Your current rate vs new RLLR/RBLR rate.
• Conversion fee — banks charge a small fee (0.5% or Rs.5,000–10,000) to switch.
• If the savings are big enough, switching is smart.

Example:
If you’re paying 9% on MCLR, and new RLLR is 8.5%, you save Rs.50,000–Rs.1 lakh over the balance tenure on an average Rs.30 lakh loan. So paying a Rs.5,000 fee is worth it.

Which is Best in 2025?

RLLR — Best for maximum Repo benefit. Spread is fixed, so you get full benefit of RBI cuts.
RBLR — Good if you have a high CIBIL score (750+) and your bank’s spread is competitive.
MCLR — Not recommended for new loans. Only keep it if your bank’s old MCLR is lower than the new RLLR, which is rare.

Conclusion – Always check your sanction letter — it clearly says whether your loan is RLLR, RBLR or MCLR and the reset frequency. Keep your CIBIL score above 750 — this gets you the best spread. If you see your bank’s new rate is lower, talk to them — a conversion or balance transfer can save lakhs. Use your bank’s online interest rate page to compare old vs new.

India’s home loan market is more transparent now than ever, thanks to RBI’s external benchmark rules. RLLR and RBLR make sure you actually benefit when RBI cuts the Repo Rate. But it’s important to understand the fine print, maintain a good credit profile, and keep an eye on your loan documents.

Small tweaks can save you big money — so stay informed, compare, and act smart!