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Loan Prepayment Calculator
Home Loan · Personal Loan · Car Loan · Part-Prepayment Impact · Updated 2026
See exactly how much interest you save by prepaying your loan
Home LoanPart-PrepaymentReduce EMIReduce Tenure
What do you want to do with the prepayment?
Enter your loan details - type a value or drag the slider
₹
₹1L₹5Cr
%
5%24%
years
1years30years
Prepayment details
₹
₹10K₹45L
mo
1239
Interest saved
₹16.04 L
total savings over loan life
Tenure reduced by
4 yr
Loan closes in 16 yr
Total amount saved
₹16.04 L
vs paying ₹₹54.1L total interest
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One prepayment of ₹5.00 L saves you ₹16.04 L!
By prepaying ₹5.0L in month 12, your loan closes 4 yr earlier and you save ₹16.04 L in interest.
Before vs after prepayment
| Without prepayment | With prepayment | Saving | |
|---|---|---|---|
| EMI | ₹43,391 | ₹43,391 (same) | — |
| Loan tenure | 20 yr | 16 yr | 4 yr less |
| Total interest | ₹54.14 L | ₹38.10 L | ₹16.04 L |
| Total amount paid | ₹1.04 Cr | ₹93.10 L | ₹11.04 L |
Outstanding balance - year by year
Without prepaymentWith prepayment
Yr 2Yr 4Yr 6Yr 8Yr 10Yr 12Yr 14Yr 16Yr 18Yr 20
Loan
₹50.0L
Rate
8.5%
Prepay
₹5.0L
Saved
₹16.0L
Does timing matter? Prepay earlier = save more
Interest saving for a ₹5.0L prepayment at different points - ₹50.0L loan at 8.5% for 20 years
| Prepay at month | Interest saved | Tenure saved | ROI on prepayment |
|---|---|---|---|
| Month 6 | ₹16.80 L | 4 yr 2 mo | 336.1% |
| Month 12your choice | ₹16.04 L | 4 yr | 320.7% |
| Month 24 | ₹14.57 L | 3 yr 9 mo | 291.5% |
| Month 36 | ₹13.20 L | 3 yr 5 mo | 263.9% |
| Month 60 | ₹10.69 L | 3 yr | 213.8% |
| Month 120 | ₹5.71 L | 2 yr | 114.3% |
Earlier prepayments save dramatically more interest because you avoid compounding on a larger outstanding principal.
How it's calculated
EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]
P = Outstanding principal at time of prepayment
r = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
n = Remaining months
After prepayment
Reduce tenure: Use same EMI on reduced balance → fewer months needed
Reduce EMI: Recalculate EMI on (balance − prepayment) for remaining n months
Should You Prepay Your Home Loan? Complete Guide
Loan prepayment means paying a lump-sum amount over and above your regular EMI to reduce your outstanding principal. Since interest is always calculated on the outstanding balance, a lower principal means less interest every subsequent month - creating a compounding effect that saves you lakhs.
A ₹50 lakh home loan at 8.5% for 20 years costs ₹57.4 lakh in total interest. A single prepayment of ₹5 lakh in year 1 slashes this by over ₹10 lakh - a return of 200%+ on your prepayment. No investment gives you a guaranteed, tax-free return like eliminating high-interest debt does.
Reduce tenure vs reduce EMI - which is better?
✓ Reduce tenure (recommended)
Maximises total interest saving
Loan closes sooner — you're debt-free faster
EMI stays the same — no cash flow risk
Better for disciplined investors
Psychological win of a shorter loan
Better if you don't need the freed cash
✓ Reduce EMI (choose when...)
Monthly cash flow is tight right now
EMI is a large % of your monthly income
You have other high-return uses for freed cash
Job uncertainty makes lower EMI safer
You can invest the EMI saving at higher returns
Approaching retirement on a fixed income
The verdict for most people
Reduce tenure almost always wins mathematically. The EMI reduction option saves less because you're paying the same interest rate on a lower balance for the same duration - you don't escape the compounding trap as quickly. Choose reduce-EMI only if cash flow is a genuine concern.
Should you prepay your loan or invest that money?
This is the most common dilemma. The answer depends on your loan interest rate and the after-tax returns you can earn on investments.
| Loan interest rate | Compare with investment | Decision |
|---|---|---|
| Below 7% | FD at 7.5%, debt fund at 7% | Invest — your loan rate is low |
| 7% – 8.5% | Equity SIP at 12%, FD at 7.5% | Split: part prepay, part invest |
| 8.5% – 10% | Equity SIP at 12% (pre-tax) | Lean towards prepayment |
| Above 10% | Any investment option | Prepay aggressively — guaranteed return |
| Personal loan 12%+ | Any investment | Prepay immediately — no debate |
Remember: home loan interest savings are guaranteed and tax-free (unlike investment returns which are taxed and uncertain). For home loans above 8.5%, prepayment is mathematically hard to beat.
The tax angle - does prepayment reduce your 80C / 24b benefits?
Yes - but it's usually still worth it. When you prepay a home loan:
Section 80C (principal repayment)
You lose deduction on the prepaid principal above ₹1.5L — but 80C limit is often already maxed by PF/ELSS anyway.
Section 24b (interest deduction)
Lower outstanding balance means less interest, which means a smaller Section 24b deduction (up to ₹2L for self-occupied). Run the numbers for your specific slab.
Old regime vs new regime
If you're on the new regime, you get no home loan deductions anyway — so prepayment has no tax downside.
What's your home loan EMI?
Calculate your exact EMI and full amortisation schedule
Prepayment charges - what do banks actually charge?
| Loan type | Floating rate | Fixed rate | Notes |
|---|---|---|---|
| Home loan (individual borrower) | NIL (RBI mandated) | 1–2% of prepaid amount | RBI circular 2012: no charges on floating rate loans to individuals |
| Home loan (company borrower) | 0–2% | 1–3% | Companies don't get the RBI protection |
| Personal loan | 2–5% | 2–5% | Typically allowed only after 6–12 EMIs |
| Car loan | 0–3% | 1–3% | Varies by lender; check your sanction letter |
| Loan against property | 0–2% | 1–3% | Similar to home loan treatment |
| Business / MSME loan | 1–3% | 2–4% | Negotiable for large prepayments |
Frequently asked questions about loan prepayment
Is it better to make one large prepayment or multiple small ones?▼
Multiple smaller prepayments spread over time can save slightly more total interest than one lump sum, provided they happen earlier. However, a single large prepayment is often more practical — it gives you a clean milestone, triggers tenure/EMI recalculation by the bank, and avoids the discipline required for regular extra payments. If you receive bonuses annually, consider prepaying the entire bonus amount each year rather than saving up for one large prepayment.
How do I notify my bank about a prepayment?▼
For home loans, you typically visit the bank branch, fill a prepayment request form, and transfer the amount via NEFT/cheque. Many banks now allow online prepayment through net banking — look for 'Part-prepayment' or 'Partial payment' in your loan account section. Always get a written acknowledgement and a revised repayment schedule from the bank post-prepayment. Confirm whether the bank has applied the prepayment towards reducing tenure or EMI.
Can I prepay a joint home loan?▼
Yes, any co-borrower can make prepayments on a joint home loan. The prepayment reduces the outstanding balance for both borrowers equally. If you want to claim the Section 80C deduction for the principal prepaid, each co-borrower can claim in proportion to their repayment. Ensure both co-borrowers are aligned on the decision, especially the reduce-EMI vs reduce-tenure choice.
What is the best time in the loan cycle to prepay?▼
The earlier the better - but early in the EMI cycle is especially powerful. In the first few years of a loan, the interest component of each EMI is at its highest (because the outstanding balance is maximum). A prepayment in year 1–3 eliminates this high-interest portion from all future months. A prepayment in the last 2 years barely saves anything — most of your balance at that point is principal, not interest.
My bank is saying prepayment will attract a penalty - is this legal?▼
For floating-rate home loans taken by individual borrowers, charging a prepayment penalty is explicitly prohibited by RBI's 2012 circular. If your bank charges a penalty on a floating rate individual home loan, you can file a complaint with the bank's grievance redressal officer, then escalate to RBI Ombudsman at https://rbi.org.in. For fixed-rate loans, personal loans, or corporate borrowers, prepayment charges are legally permitted — check your loan agreement's prepayment clause.
How does prepayment affect my home loan insurance (HLPP)?▼
Many banks sell Home Loan Protection Plans (HLPP) alongside home loans. If you prepay and reduce your outstanding balance, your insurance cover remains at the original loan amount — meaning you're over-insured. Some policies allow you to reduce the sum assured and get a partial premium refund; others don't. Review your HLPP policy document after prepayment and discuss with the insurer if a premium adjustment is possible.
What if I'm under moratorium - can I still prepay?▼
Yes, you can typically prepay even during a moratorium period (EMI holiday). The prepayment reduces your outstanding balance, which lowers the interest accruing during the moratorium. This is actually one of the best times to prepay if you have surplus cash — since no EMI is being paid, the full prepayment directly reduces your principal and prevents further interest accumulation.
Is there a minimum prepayment amount?▼
Most banks require a minimum prepayment of 1–3 EMIs' worth as a lump sum - typically ₹10,000 to ₹50,000 for home loans. Some banks have no minimum, while others may require the prepayment to be at least one month's EMI. Check your specific loan agreement or call your bank's loan servicing team for the exact minimum before planning your prepayment.