About the Home Loan Prepayment Calculator (India)
This calculator shows what a part-prepayment does to your housing loan. Enter the outstanding balance, interest rate and remaining tenure, then add a one-time lump sum (from a bonus, maturity of an FD or sale of an asset) and, if you like, a prepayment every year. Choose whether the bank should keep your EMI and shorten the tenure, or keep the tenure and lower the EMI.
The results compare the remaining interest with and without prepayments, the months cut from the loan and the new EMI. It is useful when deciding between prepaying and investing, or when your bank asks which option you want after a part-payment. Reducing tenure almost always saves more interest; reducing EMI frees up monthly cash flow.
RBI rules do not allow lenders to charge prepayment penalties on floating-rate home loans taken by individuals for non-business purposes, so the calculation assumes no charges. It also assumes a constant interest rate; with a repo-linked loan, future rate changes will alter the figures.
With the default inputs, the interest saved is ₹1,603,690.73. Change any value above to recalculate instantly.
How to use the home loan prepayment calculator (india)
- 1Enter your outstanding balance, current rate and remaining tenure.
- 2Enter the lump sum you plan to prepay and after which EMI.
- 3Optionally add an amount you can prepay every year.
- 4Choose whether to keep the EMI (shorter loan) or keep the tenure (lower EMI).
- 5Compare interest saved, EMIs saved and the new EMI.
Formula and method
The loan is simulated month by month on a reducing balance: interest is the balance × r (annual rate ÷ 12 ÷ 100) and the rest of the EMI repays principal. A prepayment is applied straight to principal right after the chosen EMI.
In reduce-tenure mode the EMI stays the same, so the smaller balance is cleared sooner and the loan ends early. In reduce-EMI mode the bank recalculates the EMI on the new balance over the months still left, so the end date is unchanged. Interest saved is the remaining interest without prepayments minus the remaining interest with them. Rates are held constant and no prepayment charges are assumed.
- P
- Outstanding balance today
- r
- Monthly interest rate (annual % ÷ 12 ÷ 100)
- n
- Remaining tenure in months
- X
- Prepayment amount
- k
- EMI number after which the prepayment is made
Worked examples
₹5 lakh prepaid after 12 EMIs, reduce tenure
On a ₹50 lakh balance at 8.5% with 20 years left, the EMI is ₹43,391 and remaining interest is about ₹54.14 lakh. Prepaying ₹5 lakh after the 12th EMI and keeping the same EMI closes the loan in 16 years instead of 20 — 48 fewer EMIs — and saves about ₹16.04 lakh of interest.
Same prepayment, reduce EMI
If instead the tenure is kept at 20 years, the bank recalculates the EMI on the lower balance for the remaining 228 months, cutting it from ₹43,391 to about ₹38,964. Interest saved is about ₹5.09 lakh — less than a third of the reduce-tenure saving.
₹30 lakh, ₹1 lakh every year and no lump sum
A ₹30 lakh balance at 9% over 15 years has an EMI of about ₹30,428. Adding ₹1 lakh after every 12th EMI closes the loan in 10 years instead of 15 and saves about ₹9.07 lakh of the ₹24.77 lakh remaining interest (the final prepayment is only the ₹18,644 left owing).
Frequently asked questions
Is it better to reduce EMI or tenure after prepaying a home loan?+
Reducing tenure saves more interest because you keep paying the same EMI on a smaller balance, so principal falls faster. Reducing EMI is better if you need lower monthly outgo or want to keep a cash buffer.
Are there charges for prepaying a home loan in India?+
Under RBI rules, banks and NBFCs cannot charge foreclosure or part-prepayment penalties on floating-rate loans to individual borrowers for non-business purposes. Fixed-rate loans may carry a charge, so check your loan agreement.
When is the best time to prepay a home loan?+
Earlier is better: in the first years most of each EMI is interest, so every rupee prepaid then removes more future interest. A prepayment in the last few years of the loan saves comparatively little.
Should I prepay my home loan or invest?+
Prepaying earns a guaranteed return equal to your loan rate. Investing makes sense only if you expect a higher post-tax return and can accept risk. Under the old tax regime, interest you prepay away also reduces your interest deduction, which slightly lowers the benefit.
Does prepayment affect my home loan tax benefit?+
Yes. Prepaid principal counts toward the ₹1.5 lakh principal deduction in the year paid under the old regime, but future interest — and therefore the interest deduction — falls. The new tax regime gives no deduction on a self-occupied home.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.