Home Loan Prepayment Calculator
Find out exactly how much interest and how many years you save by prepaying your home loan — with a side-by-side comparison and full amortization schedule.
Loan & Prepayment
₹50 Lakh
₹5 Lakh
Prepayment Frequency
Interest Saved with Prepayment
₹37.58 Lakh
Loan closes 13 yr earlier · EMI stays ₹43,391
Without Prepayment
20 yr
With Prepayment
7 yr
Interest — Without
₹54.14 Lakh
Interest — With
₹16.56 Lakh
Amortization with Prepayment
| Year | EMI Paid | Prepaid | Interest | Balance |
|---|---|---|---|---|
| 1 | ₹5,20,694 | ₹5,00,000 | ₹4,21,182 | ₹44,00,489 |
| 2 | ₹5,20,694 | ₹5,00,000 | ₹3,68,191 | ₹37,47,986 |
| 3 | ₹5,20,694 | ₹5,00,000 | ₹3,10,516 | ₹30,37,808 |
| 4 | ₹5,20,694 | ₹5,00,000 | ₹2,47,743 | ₹22,64,856 |
| 5 | ₹5,20,694 | ₹5,00,000 | ₹1,79,421 | ₹14,23,583 |
| 6 | ₹5,20,694 | ₹5,00,000 | ₹1,05,060 | ₹5,07,949 |
| 7 | ₹5,20,694 | ₹11,381 | ₹24,126 | ₹0 |
How It Works
When you prepay a home loan, the extra amount goes straight to reducing the outstanding principal — not future interest. There are two ways to use a prepayment: reduce the tenure (keep the EMI the same, so the loan closes earlier) or reduce the EMI (keep the tenure the same, so monthly outgo falls). Reducing tenure saves far more interest, because interest is charged on the balance each month and a lower balance for longer compounds the saving. Prepaying early in the loan saves the most, since the early years are interest-heavy. In India, floating-rate home loans to individuals carry no prepayment penalty (RBI rule), so prepaying is almost always beneficial if you have surplus and no higher-interest debt. This calculator models the reduce-tenure approach and shows months saved and interest saved versus the original schedule.
Formula
Each prepayment reduces the outstanding principal directly; keeping the EMI unchanged (reduce-tenure) closes the loan earlier and saves the most interest.
Frequently Asked Questions
Does prepaying a home loan reduce EMI or tenure?
You choose. Reducing tenure keeps your EMI the same and closes the loan earlier — this saves the most interest. Reducing EMI keeps the tenure but lowers your monthly payment. Most people should reduce tenure unless they need lower monthly outgo.
Is there a penalty for prepaying a home loan in India?
For floating-rate home loans to individual borrowers, RBI prohibits prepayment/foreclosure charges. Fixed-rate loans may carry a charge — check your loan agreement.
When is the best time to prepay?
As early as possible. Home loan EMIs are interest-heavy in the early years, so a prepayment in year 1–5 removes far more future interest than the same amount in year 15.
Should I prepay or invest the surplus instead?
Compare your loan rate (say ~8.5%) to your expected post-tax investment return. If investments reliably beat the loan rate, investing may win; otherwise prepaying gives a guaranteed, risk-free return equal to your loan rate.
Does a one-time prepayment or a recurring one save more?
A recurring (e.g., yearly or monthly extra) prepayment usually saves more in total because it keeps cutting the principal every period. This calculator lets you compare one-time, yearly, and monthly options.