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Home Loan Prepayment Calculator

See exactly how much interest and time you save by prepaying your home loan

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Why Prepayment Is the Best "Investment" You Can Make

Every rupee you prepay on your home loan saves you the loan's interest rate — guaranteed, risk-free. If your loan is at 8.5%, prepaying ₹1 lakh saves you ₹8,500 per year on interest — equivalent to a guaranteed 8.5% return. In the early years when most of your EMI is interest, prepayment is especially powerful.

Prepaying early in the loan tenure saves far more than the same amount prepaid later — because interest is front-loaded.

Lump Sum vs Monthly Extra Payment

Example: ₹50L loan, 8.5%, 20 years — Effect of Prepayment

Original Loan Tenure 20 years
Original Total Interest ₹54.1L
₹5L lump sum in Year 1 (reduce tenure) Save ₹12.8L, finish 3.2 yrs early
₹5,000 extra/month throughout Save ₹15.3L, finish 4.8 yrs early
₹1L/year (every year) Save ₹18.9L, finish 5.7 yrs early

Home Loan Prepayment Calculator

Current outstanding principal balance
Amount of the one-time prepayment
Banks offer both — reducing tenure saves more money

Without Prepayment

Remaining Tenure—
Monthly EMI—
Total Interest Remaining—
Total Amount Remaining—

With Prepayment

New Tenure—
Monthly EMI—
Total Interest Remaining—
Total Amount Remaining—

YOUR PREPAYMENT SAVINGS

Interest Saved
—
Time Saved
—

Always Choose Tenure Reduction Over EMI Reduction

When prepaying, banks offer two options: reduce your EMI (same tenure) or reduce your tenure (same EMI). Always choose tenure reduction — it saves you significantly more total interest. EMI reduction gives you a few hundred rupees monthly but keeps you in debt longer. Exception: if you genuinely need the cash flow relief, reduce EMI.

Frequently Asked Questions

For floating-rate home loans: RBI has mandated zero prepayment penalty. You can prepay any amount, anytime, with no charges. For fixed-rate home loans: banks can charge 2–4% of the prepayment amount as penalty — check your loan agreement. Before prepaying a fixed-rate loan, calculate whether the interest saved exceeds the penalty cost. Most modern home loans in India are floating-rate, so prepayment is completely free.
The earlier in the loan tenure, the better. In the first few years, 85–90% of your EMI goes to interest — so a prepayment in year 1 eliminates years of future interest. The same prepayment made in year 15 of a 20-year loan saves far less because most interest has already been paid. Rule of thumb: any prepayment in the first half of the loan tenure is very impactful. In the second half, compare the guaranteed interest rate saved vs potential equity returns.
The financial answer: if your expected investment return (after tax) exceeds your loan interest rate, invest instead. With home loans at 8.5% and equity mutual funds potentially returning 10–12% (tax = 10% on LTCG), investing has a mathematical edge. But: prepayment gives guaranteed, risk-free returns. Consider your risk tolerance, existing emergency fund, other high-interest debt, and psychological comfort of being debt-free. Many people optimally split: invest some, prepay some, for both financial and psychological benefits.