How does home loan prepayment save money?

A prepayment goes straight against your outstanding principal, so less balance earns interest every month after. If you keep the EMI the same, the loan finishes earlier and you pay far less total interest — even one or two part-payments a year can cut years off a 20-year loan.

Is it better to reduce EMI or tenure?

Reducing the tenure saves more interest because you clear the principal faster. Reducing the EMI eases monthly cash flow but keeps you in debt longer. This tool models the reduce-tenure approach, which most people use to save the most.

Are there prepayment charges?

For individual borrowers on floating-rate home loans, the RBI does not allow prepayment or foreclosure penalties. Fixed-rate loans may carry a charge, so check your loan agreement.

Home Loan Prepayment Calculator (India)

Home Loan Prepayment Calculator

See what prepaying does to your home loan. Add a one-time, yearly or monthly part-payment and the calculator keeps your EMI the same, shrinks the tenure, and shows exactly how much interest and time you save.

How it's calculated

The tool builds a month-by-month amortisation of your loan. Each month, interest is charged on the outstanding balance and the rest of the EMI reduces the principal. Your prepayment is applied straight to the principal, so the balance falls faster and the loan clears earlier while the EMI stays the same. The interest saved is the gap between the total interest on the original schedule and the shortened one.

Prepayment reduces principal directly. Keeping the EMI and cutting tenure saves the most interest. Floating-rate home loans carry no prepayment penalty for individuals (RBI).

Frequently asked questions

When is prepayment most effective?

Early in the loan, when the balance — and therefore the interest portion of each EMI — is largest. The same prepayment saves far more in year 2 than in year 15.

Prepay or invest instead?

Prepaying gives a guaranteed, risk-free return equal to your loan rate. Investing may beat it but carries risk — compare your loan rate against realistic post-tax returns.

Does prepayment affect tax benefits?

It can reduce the interest you pay, which lowers the interest deduction you could claim — a minor trade-off against the interest saved.

Home Loan Prepayment Calculator

Your loan

Year-by-year schedule

How it's calculated

Frequently asked questions