Home loan prepayment calculator
Enter your loan, then try one of three ways to prepay: a lump sum once a year, a little extra every month, or raising your EMI each year. You'll see the interest you save and how much sooner the loan closes.
Enter your loan
How to use it
- Loan amount, rate and tenure: use your outstanding principal, current rate and remaining years from your lender's latest statement, not the figures from the day you took the loan.
- Yearly lump sum: one extra payment every 12 months, such as a bonus. It starts at one EMI a year, which is the most common plan.
- Extra every month: a fixed amount on top of your EMI, every month.
- Raise EMI yearly: increase your EMI by a percentage each year, for example in line with your salary hike.
A worked example
Take a ₹40 lakh loan at 8.75% for 20 years. The EMI is ₹35,348, and without prepaying you pay about ₹44.84 lakh in interest over the full 240 months.
| Plan | Interest paid | Interest saved | Loan closes |
|---|---|---|---|
| No prepayment | ₹44.84 lakh | — | 20 years |
| One extra EMI (₹35,348) every year | ₹36.10 lakh | ₹8.74 lakh | 3 yr 4 mo sooner |
| ₹3,000 extra every month | ₹35.45 lakh | ₹9.38 lakh | 3 yr 7 mo sooner |
| Raise EMI by 5% every year | ₹28.47 lakh | ₹16.37 lakh | 7 yr 10 mo sooner |
Two things stand out. First, ₹3,000 a month is about the same money as one EMI a year (₹36,000 against ₹35,348), but it saves more, because each rupee goes in earlier and stops interest sooner. Second, raising the EMI with your income beats both by a wide margin, because the extra grows every year.
How the calculator works
It uses the standard reducing-balance method that Indian banks use for home loans. Each month, interest is charged on the outstanding balance at your annual rate divided by 12. Your EMI pays that interest first, and the rest reduces the principal. Every prepayment goes straight to principal, so the next month's interest is smaller. The calculator keeps your EMI the same and lets the tenure shrink. The EMI formula itself is explained step by step in our worked EMI example.
Everything runs in your browser. Nothing you type is stored or sent anywhere.
Before you prepay
- Prepayment charges: RBI rules bar banks and housing finance companies from charging individuals a penalty for prepaying a floating-rate home loan. Fixed-rate loans can carry a charge, so check your loan agreement.
- Tell the bank to reduce tenure: when you prepay, many lenders ask whether to cut your EMI or your tenure. Cutting tenure saves more interest, which is what this calculator assumes. Our guide on EMI vs tenure when rates change shows the difference.
- Keep an emergency fund first: money paid into a loan is hard to get back. Have three to six months of expenses set aside before prepaying. See our emergency fund guide.
- Tax: under the old tax regime, home loan interest is deductible up to ₹2 lakh a year for a self-occupied home, which lowers the real cost of the loan. Under the new regime that deduction is not available for a self-occupied home.
For the full decision, including when investing beats prepaying, read how to prepay a home loan in India.
Questions people ask
How much do I save by paying one extra EMI a year?
On a ₹40 lakh loan at 8.75% for 20 years, one extra EMI of ₹35,348 every year saves about ₹8.74 lakh in interest and closes the loan 3 years and 4 months early. The exact figure depends on your rate and how many years are left, which is what the calculator above works out.
Is it better to reduce the EMI or the tenure after prepaying?
Reducing the tenure saves more interest, because your EMI stays high and keeps paying the balance down fast. Reducing the EMI lowers your monthly outgo but leaves the loan running longer. If cash flow is comfortable, choose tenure.
Is a little extra every month better than a lump sum once a year?
For the same total, yes. ₹3,000 a month is about the same money as one EMI a year on the example loan, but it saves ₹9.38 lakh instead of ₹8.74 lakh, because each payment starts cutting interest sooner.
Should I prepay my home loan or invest the money?
Compare your loan rate with the after-tax return you can reliably expect. Prepaying an 8.75% loan is a guaranteed, risk-free 8.75% return. Investing may beat it over long periods, but not with certainty. Many people split the difference: prepay a fixed amount every year and invest the rest.
Will my bank charge a prepayment penalty?
Not on a floating-rate home loan taken by an individual for non-business use; RBI rules bar it. Fixed-rate loans can carry a charge, so check your loan agreement.
This calculator is for education and estimates only. Your lender's statement is the final word on your balance and interest.