Home Loan Prepayment Calculator — Save Lakhs in Interest
Find out exactly how much interest you save and how many months you eliminate by making a lump-sum prepayment on your home loan today.
What you'll need
- Original loan amount and interest rate
- Loan tenure (years)
- How many years into the loan you are
- Prepayment amount (lump sum)
How It Works
Enter your loan details
Provide your original loan amount, interest rate, and tenure.
Enter prepayment details
Specify how many years in you are and the lump sum you want to prepay.
Choose your goal
Select whether you want to reduce your EMI or reduce your loan tenure — and see the interest saved.
Interest Saved by Prepayment Amount (₹50L loan, 8.75%, 20yr, Year 5)
| Prepayment Amount | Interest Saved | Time Saved | Effective Return |
|---|---|---|---|
| ₹1 Lakh | ~₹1.8L | ~6 months | ~180% |
| ₹2 Lakh | ~₹3.4L | ~1 year | ~170% |
| ₹5 Lakh | ~₹7.9L | ~2.5 years | ~158% |
| ₹10 Lakh | ~₹14L | ~4.5 years | ~140% |
Effective return = interest saved / prepayment amount. Higher than most fixed deposits since savings are tax-free (on floating loans).
Frequently asked questions
Is there a penalty for prepaying a home loan in India?
No. As per RBI guidelines, banks cannot charge prepayment penalties on floating rate home loans. Fixed rate loans may have prepayment charges of 2–3% of the outstanding principal. Always check your loan agreement before prepaying.
Should I reduce EMI or reduce tenure when I prepay?
Reducing tenure saves more interest in total because the loan is paid off faster. Reducing EMI gives you immediate monthly cash flow relief. Most financial advisors recommend reducing tenure if you can manage the current EMI, as the total interest saving is significantly higher.
What is the best time to make a prepayment on a home loan?
The earlier in the loan tenure you prepay, the more interest you save. In the initial years, most of the EMI goes toward interest rather than principal, so prepaying early has a disproportionately large impact. Prepaying in Year 2–5 typically saves 2–4x the prepayment amount in interest over the remaining tenure.
Is prepaying a home loan better than investing in mutual funds?
If your home loan rate is 8.75%, prepaying gives you a guaranteed, tax-free return equivalent to that rate. Mutual funds may offer higher long-term returns (10–12% for equity) but with market risk. If you are in the 30% tax bracket and have fully utilized your 80C/24(b) tax benefits, investing in equity may outperform prepayment over 7+ years.
Authoritative resources
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