Finance · Free tool
Loan Prepayment Calculator
Even a small extra payment changes the math significantly because interest accrues on the outstanding balance every month. See exactly how many years (and rupees) an extra payment saves.
Loan terms
Prepayment plan
Earlier is better.
Lump-sum vs extra EMI — which works better?
A bonus prepayment in year 2 saves more interest than the same amount paid in year 8 — because more of the early EMI goes to interest. If you have a one-time windfall, deploy it early. If you have a steady surplus, an extra ₹5,000–10,000 monthly is the easier habit and matches a mid-cycle lumpsum in total impact.
Prepayment penalty — the rule
For floating-rate home loans for individuals, RBI prohibits prepayment penalty (Aug 2012 circular). Fixed-rate or business loans can have penalties — typically 2-4% of the prepaid principal. Always check your sanction letter.
FAQ
Will the bank charge a fee to prepay my home loan?
For floating-rate home loans for individuals: NO — RBI prohibited prepayment penalty in Aug 2012. For fixed-rate loans, business loans or NBFC lending, penalties are typical (2-4% of prepaid principal). Always check your sanction letter.
Should I prepay my loan or invest the surplus?
Compare the loan rate (post-tax, after 80C/24b benefits if applicable) to the expected investment return. If loan rate is 8.5% and you can earn 12% in equity over 10+ years, investing wins mathematically — but prepayment is a guaranteed return with zero volatility. Most people sleep better with a smaller loan.
Should I shorten tenure or reduce EMI when prepaying?
Shortening tenure saves more interest. Reducing EMI gives monthly cashflow flexibility. Most banks ask which you prefer at the time of prepayment. The default — keep EMI same, shorten tenure — typically saves the most.