Home Loan Prepayment Calculator
Prepayment is the most underused wealth tool in Indian households. Because home-loan interest is front-loaded, every rupee prepaid in the early years kills many rupees of future interest.
The proof: ₹50 lakh at 9% for 20 years, prepaying just ₹1 lakh a year, saves about ₹20 lakh in interest and ends the loan 6+ years early. That's a 20× return on each prepaid rupee — tax-free and risk-free.
Four steps, thirty seconds.
Enter your loan details. Outstanding amount (not original, if you've been paying a while), current rate, remaining tenure.
Set a realistic yearly prepayment. Bonuses, tax refunds, maturing FDs — whatever you can actually spare once a year.
Read 'interest saved'. That's real money that stays with you instead of going to the bank.
Check the tenure cut. Then decide: prepay, or invest the surplus? (Our take: prepay if your loan rate exceeds your expected post-tax investment return.)
The method: standard EMI amortization, with your yearly prepayment subtracted from principal at each year-end. EMI stays constant, so the loan ends sooner.
Worked example: ₹50 lakh, 9%, 20 years, ₹1 lakh prepaid yearly → total interest falls from ≈ ₹58 lakh to ≈ ₹37.8 lakh (saving ≈ ₹20.2 lakh) and the loan ends ~6 years early.
Reducing-balance amortization per RBI norms; prepayment mechanics follow standard Indian floating-rate home-loan terms (no prepayment penalty on floating loans per RBI/NHB rules).
Not on floating-rate home loans — RBI and NHB prohibit prepayment penalties there. Fixed-rate loans may charge 2–3%; check your agreement.
Compare post-tax returns: if your home loan costs 9% and your investment earns 12% pre-tax (~10.5% post-tax for equity LTCG), investing wins mathematically. But prepayment is guaranteed and tax-free — many prefer the certainty.
Reducing tenure saves far more interest than reducing EMI. Always choose tenure reduction unless your monthly cash flow is tight.
Early years — that's when the interest component is largest. ₹1 lakh prepaid in year 2 saves multiples of ₹1 lakh prepaid in year 15.
You can, but think twice: EPF earns 8.25% tax-free. Prepaying a 9% loan with 8.25% money is only marginally beneficial — the emotional win of being debt-free is the real prize.
Disclaimer: Educational illustration only — not financial advice. Assumes yearly prepayment against principal with constant EMI; lender-specific charges not included.