Home Loan Prepayment Calculator

How the home loan prepayment calculator works

The calculator builds your normal repayment schedule, then subtracts the part payment from the balance in the month you choose. After that it follows the option you picked:

• Keep EMI, cut tenure: the EMI stays the same, so the smaller balance is cleared sooner.
• Keep tenure, cut EMI: the lender works out a new, lower EMI for the remaining months.

It then compares total interest with and without the prepayment. A ₹40 lakh, 20 year loan at 8.5% has an EMI of ₹34,713. Paying ₹3,00,000 extra in month 24 and keeping the EMI saves ₹9,18,603 in interest and finishes the loan 2 years 11 months early.

Reduce EMI or tenure: which saves more

Reducing tenure saves more than three times as much here, because the EMI keeps attacking the balance at full strength. Reducing EMI suits you if cash flow is tight or you want to lower risk after a job change. Many lenders apply prepayments to tenure by default; tell them in writing which option you want.

Timing matters: early vs late prepayment

The same ₹3 lakh paid in month 120, halfway through, saves only ₹3,56,433 and cuts 1 year 6 months. Early in a loan most of each EMI is interest, so removing principal then stops the most interest from building up. If you have spare money and a long loan, sooner is better.

That does not mean you must prepay at all costs. Keep an emergency fund first. If your loan rate is low and you have the discipline to invest for the long term, some people prefer to invest instead. Compare the after tax loan rate with a realistic after tax return before deciding.

Prepayment rules and charges

• Banks and NBFCs may not levy a prepayment or foreclosure penalty on a floating rate term loan an individual took for personal (non business) use. Most home loans fall here.
• Fixed rate home loans, and loans taken by companies or for business, may carry a charge, often 2% to 4% of the amount prepaid.
• Some lenders set a minimum part payment, such as one or more EMIs.
• Ask for a revised repayment schedule after each prepayment, and check it with the amortization schedule tool.

Home loan part payment calculator tips

1. Use windfalls: a bonus, a matured FD or an inheritance.
2. Raise the EMI each year: a 5% yearly EMI increase can cut a 20 year loan to around 12 to 13 years. Ask your lender if they allow it.
3. Prepay before a rate rise if you can: it softens the hit.
4. Weigh tax: under the old regime, home loan interest has a deduction; prepaying lowers that deduction slightly.
5. Keep proof: save the receipt and the revised schedule.

To close the loan fully instead of part paying, see the loan foreclosure calculator. To plan the original loan, start with the home loan EMI calculator.

Personal loan and car loan prepayment

The personal loan prepayment calculator logic is the same; just expect a possible fee, since such loans are usually fixed rate. On a short loan, much of the interest has already been paid by the halfway point, so the saving from prepaying late is small. Subtract any charge plus 18% GST from the interest saved to see whether it is worth it. Your original schedule comes from the personal loan page.