Home Loan Prepayment Calculator
Find out how much interest and time you can save by paying a fixed extra amount toward your home loan principal every month, on top of your regular EMI — compared against the interest you would pay with no prepayment at all.
Fill in the form and select "Calculate" to see your results here.
What is loan prepayment?
Prepayment means paying more toward your home loan than the EMI your lender requires — an extra amount that goes straight toward reducing the outstanding principal rather than covering interest. Because interest on a reducing-balance loan is charged only on the balance still owed, cutting that balance faster means less interest accrues in every subsequent month for the rest of the loan.
There are two common ways to use a prepayment. The first — modelled by this calculator — keeps your EMI fixed and adds a constant extra amount to the principal portion every month, which shortens the tenure: the loan simply gets paid off sooner. The second approach keeps the original tenure unchanged and instead asks the lender to recalculate a lower EMI once a prepayment is made, which reduces your monthly outgo rather than the loan term. This calculator only models the first strategy — "keep EMI fixed, shorten tenure" — because it typically delivers the larger total interest saving. If your lender has offered to reduce your EMI instead, the interest savings shown here will not directly apply to that scenario.
How to use this calculator
- Enter your current outstanding loan principal — the amount you still owe today, not the amount you originally borrowed.
- Enter the annual interest rate currently applicable to your loan.
- Enter the remaining tenure, in years or months, as per your current repayment schedule.
- Enter the extra amount you plan to pay toward principal every month, in addition to your regular EMI.
- Select "Calculate Savings" to see your EMI, the interest saved, the time saved, and a year-wise schedule of the accelerated repayment.
Methodology
Unlike a plain EMI calculation, there is no single closed-form formula that tells you exactly when a loan with a recurring extra payment will be paid off — so this calculator works the problem out month by month instead. Starting from your outstanding balance, it repeats the following steps for each month until the balance reaches zero:
The regular EMI itself still comes from the standard reducing-balance formula, EMI = [P × r × (1 + r)^n] / [(1 + r)^n − 1], where P is the outstanding principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the remaining tenure in months. The calculator then compares the total interest paid under this accelerated schedule against the total interest that a full, unmodified n-month schedule would have charged with no extra payment.
Example
Consider an outstanding home loan of ₹40,00,000 at 8.5% p.a. with 20 years (240 months) remaining. Without any prepayment, the standard amortization schedule charges total interest of approximately ₹43,31,103 over the full 240 months. Now suppose you pay an extra ₹5,000 every month on top of your regular EMI. Running the month-by-month calculation shows the loan is fully repaid in just 178 months instead of 240 — a saving of 62 months, or roughly 5.2 years — and the total interest paid drops to approximately ₹30,32,149. That works out to an interest saving of approximately ₹12,98,954 for an extra outlay of only ₹5,000 a month, illustrating how much leverage a modest recurring extra payment has over a long tenure.
Factors that affect your savings
- No prepayment penalty on most floating-rate loans. Reserve Bank of India rules prohibit lenders from charging a prepayment or foreclosure penalty on floating-rate home loans to individual borrowers, so most borrowers can make extra payments freely. Fixed-rate loans and loans to non-individual entities may still attract a charge — always confirm your specific lender's terms before committing to a prepayment plan.
- Fixed rate assumed for the full remaining tenure. This calculator assumes the interest rate you enter stays constant for the entire remaining term. It does not model a floating rate that resets partway through, so if your rate changes, your actual savings will differ from this estimate — re-run the calculator with the new rate to update the numbers.
- Recurring extra payment, not a one-time lump sum. This calculator only models a constant extra amount paid every month. A single lump-sum prepayment made once produces different — usually smaller, one-time — savings than a sustained recurring extra payment of the same size, because it only reduces the balance once rather than every month going forward.
- Size of the extra payment relative to the EMI. Larger extra payments shrink the tenure and interest more, but the relationship is not linear — the earlier in the loan you start prepaying, the more months of avoided interest you capture.
- Opportunity cost. Prepaying is generally most worthwhile when your loan's interest rate is higher than the after-tax return available from other uses of the same money, and after you already have adequate emergency savings.
Frequently Asked Questions
Usually not. RBI regulations prohibit banks and NBFCs from charging a foreclosure or prepayment penalty on floating-rate home loans taken by individual borrowers. Fixed-rate home loans, and loans to non-individual borrowers, may still carry a prepayment charge, so check your specific loan agreement before making a large extra payment.
Reducing the tenure while keeping the EMI fixed — the strategy this calculator models — generally saves more total interest, because the loan is paid off sooner and less time is left for interest to accrue. Reducing the EMI while keeping the tenure fixed lowers your monthly outgo instead, which can help cash flow but saves less interest overall. Choose based on whether your priority is monthly affordability or minimizing total interest paid.
No. This calculator only models a recurring extra amount paid every month alongside your regular EMI, not a single lump-sum payment made once. A one-time lump sum reduces the principal balance immediately at the point you make it, which produces different — usually smaller, one-time — savings than a sustained monthly extra payment of the same size. You can approximate a lump sum's early impact by treating it as a larger "outstanding loan amount" reduction before running this calculator, but the underlying model is not the same.
Because interest is charged every month on the outstanding balance, and a small extra payment compounds its effect over the entire remaining life of the loan. Every rupee of extra principal paid early stops accruing interest for every remaining month of the tenure, so even a modest recurring amount adds up to substantial interest savings — and shortens the loan — over many years.
Not necessarily. Prepaying is generally worthwhile when your home loan rate is higher than the after-tax return you could earn by investing the same money elsewhere, and when you have adequate emergency savings already set aside. If you have higher-interest debt (such as a credit card) or no emergency fund, addressing those first is usually a better use of the extra amount.
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Calculations are estimates based on the information entered. Actual lender terms, prepayment charges (where applicable), and interest rate changes on floating-rate loans can all affect your real-world savings, and this calculator is not a substitute for a statement from your lender. See our full disclaimer.