About this tool
A lump-sum payment early in a loan cuts the most interest, because interest is charged on the outstanding balance. Enter when you plan to prepay and the calculator compares the loan with and without it.
When prepaying a loan makes sense
Prepaying a loan is one of the few guaranteed returns available to an ordinary household. Every rupee you put towards the principal stops attracting interest at your loan rate for the rest of the term. On a ₹40 lakh home loan at 8.5% for 20 years, a single ₹2 lakh prepayment at the end of the second year, with the EMI kept the same, shortens the loan by about two years and saves roughly ₹6.4 lakh of interest.
Timing matters more than most people expect. Early in the loan, the outstanding balance is at its highest, so a prepayment removes more future interest. The same amount paid in the last few years saves far less. Use this calculator to try a prepayment at different points and you will see the saving shrink as the date moves later.
You usually get a choice between reducing the EMI and reducing the tenure. Cutting the tenure saves more interest, while cutting the EMI frees up monthly cash flow. Neither is wrong; it depends on whether you value lower total cost or breathing room in your budget. Before prepaying, keep an emergency fund of a few months' expenses, because money sent to the lender is hard to get back quickly. Also check your loan terms. Floating-rate home loans taken by individuals generally carry no prepayment penalty, but fixed-rate and some business loans may charge one, and that fee should go into your sums before you decide. Running the numbers here first takes a few seconds and makes the conversation with your bank much more straightforward.
How to use it
- Enter your numbers in the boxes, or drag the sliders.
- Read the result on the right. It updates as you type.
- Open the year-by-year table, if shown, to see how the numbers change over time.
- Use 'Copy link with these values' to save the calculation or send it to someone.
Questions
Is it better to reduce EMI or tenure after prepaying?
Reducing tenure saves more interest. Reducing EMI frees up monthly cash flow. This calculator shows both so you can choose.
Are there charges for prepaying a home loan?
RBI does not allow banks to charge prepayment penalties on floating-rate loans to individuals. Fixed-rate loans may carry a charge.
Last reviewed 16 October 2026. Results are estimates for planning. Check important figures with your bank, employer or a qualified adviser.