Home Loan Prepayment Calculator
Calculate interest saved, tenure reduction, and new EMI after home loan prepayment. Compare reduce tenure vs reduce EMI options instantly.
Home Loan Prepayment Calculator India
The Home Loan Prepayment Calculator helps borrowers understand how making a lump sum prepayment reduces total interest burden. You can compare two options: reduce tenure or reduce EMI.
How Prepayment Works
When you prepay a portion of the principal, your outstanding balance reduces. Since home loans follow reducing balance interest, future interest is calculated on the lower principal.
Formula Used
EMI Formula:
EMI = P × r × (1+r)^n / [(1+r)^n − 1]
- P = Principal
- r = Monthly interest rate
- n = Total months
Reduce Tenure vs Reduce EMI
- Reduce Tenure: EMI remains same, loan closes faster, maximum interest saved.
- Reduce EMI: Tenure remains same, EMI reduces, lower monthly burden.
Why Prepay Early?
Interest is highest during initial years of home loan. Prepaying early results in higher interest savings.
Example
On ₹20 lakh outstanding loan at 8.5% for 10 years, a ₹2 lakh prepayment can save lakhs in interest depending on tenure.
Benefits
- Interest savings
- Debt-free earlier
- Improved credit score
- Reduced financial stress
Disclaimer
Prepayment charges may apply for certain loan types. Confirm with your lender before prepaying.
Frequently Asked Questions
Is home loan prepayment beneficial?
Yes. It reduces interest cost significantly, especially in early years.
Should I reduce tenure or EMI?
Reducing tenure saves more interest. Reducing EMI improves monthly cash flow.
Do banks charge prepayment penalty?
Floating rate home loans usually have no prepayment penalty in India.
When is best time to prepay?
Early years of loan tenure offer maximum interest savings.
Does prepayment affect credit score?
No negative impact. It may improve your debt profile.
Can I prepay multiple times?
Yes, subject to bank policy and minimum prepayment limits.