Home Loan Prepayment Calculator
See exactly how much interest you save and how many years you cut off your home loan by making a lump-sum prepayment or paying a little extra every month.
How does home loan prepayment save you money?
A home loan prepayment (also called part-payment) is any amount you pay over and above your regular EMI. Because Indian home loans use the reducing-balance method, every rupee you prepay goes straight to your outstanding principal — which lowers the interest charged in every single month that follows. Prepaying early in the loan, when your balance is highest, saves the most interest.
You then choose what to do with that saving: Reduce Tenure keeps your EMI the same and finishes the loan years earlier, while Reduce EMI keeps the tenure the same and lowers your monthly payment. For most borrowers, reducing the tenure saves far more interest overall.
Lump-sum vs monthly extra prepayment
A one-time lump-sum — say from a bonus, maturity of an FD, or a gift — makes a big immediate dent in your principal. A small monthly extra on top of your EMI is gentler on cash flow but, compounded over years, can shave off just as many years. This calculator lets you model both together and see the combined saving.
Frequently Asked Questions
Is it better to reduce tenure or reduce EMI on prepayment?
Reducing the tenure almost always saves more total interest, because you keep paying the same EMI and close the loan faster. Reducing the EMI helps monthly cash flow but leaves you paying for the full original tenure. Use the toggle above to compare both for your exact loan.
Are there charges for prepaying a home loan in India?
As per RBI guidelines, banks and housing finance companies cannot charge prepayment or foreclosure penalties on floating-rate home loans taken by individuals. Fixed-rate loans may attract a charge, so confirm the terms with your lender before making a large prepayment.
When is the best time to prepay a home loan?
The earlier the better. In the first years of a home loan, most of your EMI goes towards interest and your outstanding principal is at its highest, so an early prepayment removes the most future interest. Prepayments in the last few years save comparatively little.
How much can I save by paying one extra EMI every year?
Paying just one extra EMI a year (or the equivalent monthly extra) can typically cut a 20-year home loan by around 3–4 years and save several lakhs in interest. Enter your loan details and a monthly extra above to see the exact number for your loan.