Home Loan Prepayment Calculator
Enter your loan details and a yearly prepayment to see how many years you shave off — and how much interest you save.
Runs entirely in your browser — your numbers never leave this page.
How it works
Prepaying a home loan means paying extra toward the principal — and because Indian home loans use reducing-balance interest, early extra payments destroy future interest:
- The mechanism: interest each month = outstanding balance × monthly rate. Shrink the balance early, and every subsequent EMI has less interest baked in.
- Example: Rs 50L at 9% for 20 years → Rs 45,000 EMI, ~Rs 58L total interest. Prepay Rs 1L every year → loan ends ~4 years early, saving ~Rs 14L in interest.
- Timing matters: Rs 1L prepaid in year 2 saves far more than Rs 1L in year 15 — early principal kills the most interest.
- Floating vs fixed: floating-rate loans (most home loans) have no prepayment penalty by RBI rule; fixed-rate loans may charge.
- Prepay vs invest? Prepaying earns a guaranteed, tax-free return equal to your loan rate (9%). Investing might beat it — but "might" is doing heavy lifting.
Frequently asked questions
How much does prepaying a home loan save?
Rs 50L at 9% for 20 years with Rs 1L yearly prepayment: ~4 years shorter tenure and ~Rs 14L less interest. Early prepayments save the most.
Is there a penalty for home loan prepayment?
No penalty on floating-rate home loans (RBI rule). Fixed-rate loans may charge — check your sanction letter.
Should I prepay or invest the money?
Prepaying gives a guaranteed tax-free return equal to your loan rate (~9%). Investing in equity might earn more long-term but with risk. Many do both.
When is the best time to prepay?
As early as possible — in the first half of the tenure, EMIs are mostly interest, so principal cuts have maximum effect.
Does prepayment reduce EMI or tenure?
Your choice at most lenders: keep EMI and shorten tenure (saves more interest — recommended), or reduce EMI and keep tenure.
How often can I prepay?
As often as you like on floating-rate loans — yearly bonuses, or small monthly top-ups. Even Rs 5,000 extra/month compounds into big savings.
Will prepaying affect my tax benefits?
Slightly — less interest means a smaller 24b deduction. But paying 30% tax on saved interest to "save tax" was never a good deal.
What is a good prepayment amount?
One extra EMI per year is the classic rule of thumb. More is better if your emergency fund is intact.
Can I prepay from day one?
Yes — some lenders allow prepayment from the first month. The earlier, the bigger the saving.
Does part-prepayment need paperwork?
Usually just a request via netbanking or branch. Full foreclosure needs a closure letter and original documents back.