Home Loan EMI Calculator with Prepayment
Calculate how prepayments impact your home loan EMI, tenure, and interest savings with our free online prepayment calculator. Plan your prepayment strategy effectively and save lakhs in interest payments.
Calculate how prepayments impact your home loan EMI, tenure, and interest savings with our free online prepayment calculator. Plan your prepayment strategy effectively and save lakhs in interest payments.
Our prepayment calculator helps you understand the impact of making additional payments towards your home loan. Here's how it works:
When you make prepayments on your home loan, you have two options:
Both options lead to interest savings, but they serve different financial goals. Reducing tenure helps you become debt-free faster, while reducing EMI improves your monthly cash flow.
The calculator uses the following steps to determine the impact of prepayments:
You can choose from the following prepayment frequencies:
Rahul has a home loan of ₹50,00,000 at 8% interest for 20 years. After 2 years, he receives a bonus of ₹5,00,000 and decides to make a one-time prepayment:
By making a one-time prepayment of ₹5,00,000, Rahul saves ₹8,74,540 in interest and becomes debt-free 3 years and 5 months earlier.
Priya has a home loan of ₹40,00,000 at 7.5% interest for 25 years. She decides to pay an additional ₹5,000 every month along with her EMI:
By making regular monthly prepayments of ₹5,000, Priya saves ₹17,82,320 in interest and becomes debt-free almost 8 years earlier.
Loan prepayment refers to paying off all or part of your loan amount before the scheduled end of the loan tenure. Prepayments can be made as lump sum payments or as regular additional payments along with your EMI. Prepayments help reduce the outstanding principal, which in turn reduces the interest component of future EMIs, leading to significant interest savings over the loan tenure.
Prepayment affects your home loan in two ways, depending on your choice: 1) Reduced Tenure: Your EMI remains the same, but your loan gets closed earlier than the original schedule, reducing the total interest paid. 2) Reduced EMI: Your loan tenure remains the same, but your monthly EMI amount decreases, giving you better monthly cash flow. In both cases, you save on interest payments because the outstanding principal reduces faster than in the original schedule.
A prepayment penalty is a fee charged by some lenders when you pay off all or part of your loan before the scheduled end of the loan tenure. This penalty is typically calculated as a percentage of the prepayment amount or the outstanding loan balance. Many banks in India have eliminated prepayment penalties for floating rate home loans, but they may still apply to fixed-rate loans or other types of loans. Always check your loan agreement for prepayment penalty clauses.
The choice between reducing EMI or reducing tenure depends on your financial goals and cash flow situation. Choose to reduce tenure if you want to become debt-free faster and save more on total interest payments. Choose to reduce EMI if you need better monthly cash flow and want to reduce your monthly financial burden. Generally, reducing tenure saves more money in the long run, while reducing EMI provides immediate relief to your monthly budget.
The best time to make prepayments is as early as possible in your loan tenure,
preferably within the first 5-7 years. This is because in the initial years, a larger portion of your
EMI goes towards interest payments. Prepayments made early in the loan tenure have a more significant
impact on reducing the total interest burden. However, any prepayment at any time during the loan
tenure will result in interest savings.
After making the prepayment, always request a revised repayment schedule and confirmation of the
prepayment application.