Loan Prepayment Calculator
Enter your loan details and press
Calculate Savings
Your Prepayment Savings
| Year | EMI Paid | Principal (W/O) | Interest (W/O) | Balance (W/O) | Balance (With Prepay) |
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Loan Prepayment Calculator Guide
Loan prepayment means paying an extra lump sum (over and above your regular EMI) directly towards your outstanding principal. Since interest is calculated on the remaining balance, reducing the principal early leads to dramatically lower total interest — and a shorter loan tenure.
Home loan of ₹50,00,000 at 8.5% for 20 years. Prepay ₹5,00,000 after 12 EMIs:
P – Principal
Outstanding loan amount at the time of calculation.
r – Monthly Rate
Annual rate ÷ 12. E.g. 8.5% p.a. = 0.708% per month.
n – Remaining EMIs
After prepayment, remaining months reduce — shrinking total interest.
Prepay Effect
Prepayment reduces outstanding principal, cutting both tenure and total interest.
Early in Tenure
Maximum benefit comes from prepaying in the first 3–5 years when the interest component of your EMI is highest.
After a Bonus / Windfall
Use a year-end bonus, tax refund, or any lump sum to make a meaningful prepayment instead of parking it in a savings account.
Check Prepayment Charges
Floating-rate home loans have zero prepayment penalty (RBI mandate). Fixed-rate and personal loans may charge 1–4%.
Massive Interest Savings
Even a single prepayment can save you lakhs on a long-tenure home loan — far more than the same money in a savings account.
Shorter Loan Tenure
Become debt-free years earlier. Closing a 20-year loan in 16 years gives you financial freedom and peace of mind.
Improved Credit Score
Lower outstanding debt improves your credit utilisation ratio, positively impacting your CIBIL / credit score over time.
Q1: Is there a penalty for prepaying a home loan?
As per RBI guidelines, banks cannot charge a prepayment penalty on floating-rate home loans. For fixed-rate loans, a charge of 1–2% of the prepaid amount may apply.
Q2: Should I prepay or invest the surplus?
If your loan interest rate (e.g. 8.5%) is higher than the expected post-tax return on your investment, prepayment wins.
Q3: Should I reduce tenure or EMI after prepayment?
Reducing tenure saves more total interest. Reducing EMI is better if you need monthly cash flow relief. Most financial advisors recommend reducing tenure.
Q4: Can I make multiple prepayments?
Yes. Most banks allow partial prepayments anytime after 6 months. Each prepayment compounds the savings — the more you prepay, the less you owe.
Authority Sources: RBI India • Investopedia – Prepayment • NHB India