EMI Prepayment Calculator
See how much interest you save and how many months you cut by prepaying your loan
tuneLoan Details
Interest Saved
₹9,32,541
≈ 9.3 Lakh saved
Months Saved
38 months
Tenure reduced by 3.2 yrs
Original EMI
₹43,391
Stays the same
Balance Before Prepay
₹47,23,441
After 24 EMIs
Balance After Prepay
₹42,23,441
Minus ₹5,00,000
New Tenure
202 months
16.8 years
Original vs Prepaid Loan
Original Total Interest
₹54,13,841
New Total Interest (after prepay)
₹44,81,300
functions How It Works
EMI is recalculated on the remaining balance after the lump-sum prepayment. Tenure reduces while EMI stays the same.
Interest Saved = Original total interest − New total interest
Why Prepay Your Loan?
Loan interest is front-loaded — in the first year of a 20-year home loan, nearly 85% of every EMI goes toward interest, not principal. A lump-sum prepayment directly reduces the outstanding principal, which reduces all future interest calculations and cuts years off your loan.
Even a single annual bonus payment of ₹2–5 lakh on a ₹50 lakh home loan can reduce tenure by 3–5 years and save ₹8–15 lakh in interest over the loan life.
lightbulb Prepayment Strategy
Scenario: ₹50L home loan at 8.5% for 20 years — prepay ₹5L after 24 months
1Original EMI = ₹43,391 | Total interest = ₹54.1L
2Balance after 24 EMIs ≈ ₹47.2L
3After ₹5L prepay → balance ₹42.2L, new tenure ≈ 202 months
✓ Save ≈ ₹9.3 lakh in interest and cut 38 months (3+ years) off the loan
Frequently Asked Questions
Everything about loan prepayment in India
Is there a penalty for prepaying a home loan?
No. RBI mandates that banks cannot charge prepayment penalties on floating rate home loans. For fixed rate home loans, some banks charge 2–4% of the prepaid amount, but most have removed this. Always check your loan agreement. NBFCs may still charge prepayment fees on both fixed and floating rate loans — confirm before prepaying.
Should I reduce EMI or tenure after prepayment?
Reducing tenure (keeping same EMI) saves significantly more interest than reducing EMI. Reducing EMI lowers your monthly burden but extends the interest-payment period. If your cash flow is comfortable, always choose to reduce tenure. Choose EMI reduction only if you expect a period of lower income ahead.
When is the best time to prepay?
The earlier in the loan tenure, the better. In the first 1/3rd of the loan, most of the EMI goes toward interest. Prepaying in year 2–3 of a 20-year loan saves far more than prepaying in year 15. A rough rule: if more than 50% of your original tenure remains, prepayment returns are very high. After 15+ years of a 20-year loan, the benefit reduces significantly.
Is prepayment better than investing the same amount?
Compare your post-tax loan rate vs post-tax investment return. Home loan at 8.5% (pre-tax) — after 80C/24(b) deductions, effective rate may be 6–7%. If you can earn 10–12% post-tax in equity mutual funds, investing wins mathematically. But psychologically, being debt-free has value. For high-rate loans (personal loan at 14%+), prepayment almost always beats investment.