Home Loan Prepayment Calculator – Part Payment Savings
IndiaSee exactly what a part payment does to your home loan. Add a one-time, monthly or yearly prepayment, choose whether you want a shorter loan or a lower EMI, and see the interest you save, how the strategies compare, and whether investing the money would do better.
By Ramanathan · RBI prepayment rules last verified: October 8, 2026
- No Data Stored
- 100% Free Forever
- Month-by-Month Calculation
Still choosing a loan? Work out the EMI first, then come back to plan your prepayments.
This prepayment calculator needs JavaScript to run its month-by-month calculation. Here is a worked example; enable JavaScript and reload to use your own figures.
Example
A ₹20,00,000 home loan at 8.5% over 20 years has an EMI of ₹17,356 and costs ₹21,65,552 in interest. A one-time prepayment of ₹2,00,000 after the 36th EMI, keeping the EMI the same, closes the loan after 16 years 7 months and saves ₹5,27,855 in interest.
COMPARE STRATEGIES
Which prepayment strategy saves the most?
Your plan beside three common habits, on the same loan. All three presets keep the EMI and let the loan finish early. They scale with your loan: the monthly top-up is about a tenth of your EMI and the yearly payment about 5% of the amount you owe.
| Strategy |
|---|
PREPAY OR INVEST?
Prepay the loan or invest the money?
Both paths spend the same cash every month until your loan's original end date. Prepaying puts the extra money into the loan and invests whatever that frees up once the loan closes. Investing leaves the loan alone and invests the extra money instead. The figures are the value of each pot at the end.
- If you prepay
- ₹8,98,758
- If you invest instead
- ₹15,22,616
An assumption, not a forecast. Investment returns vary and are taxed; prepaying earns your loan rate with certainty.
Repayment schedule with prepayments
| Month | EMI | Extra paid | Principal | Interest | Balance |
|---|
Estimate only. The calculation assumes your interest rate stays the same; a floating rate that resets will change the figures. Your lender's revised schedule after a prepayment is the authority.
QUICK REFERENCE
Interest saved by a one-time prepayment
For a ₹20 lakh home loan at 8.5% over 20 years (EMI ₹17,356), keeping the EMI unchanged after the prepayment. Each cell shows the interest saved and how much sooner the loan closes. The earlier the payment, the bigger the saving: the same ₹1 lakh saves ₹3,56,554 after the first year but ₹1,23,601 after the tenth.
| Prepayment | After year 1 | After year 3 | After year 5 | After year 10 |
|---|---|---|---|---|
| ₹1 lakh | ₹3,56,554 · 26 mo | ₹2,90,747 · 22 mo | ₹2,33,797 · 19 mo | ₹1,23,601 · 12 mo |
| ₹2 lakh | ₹6,41,476 · 48 mo | ₹5,27,855 · 41 mo | ₹4,27,661 · 36 mo | ₹2,28,553 · 24 mo |
| ₹5 lakh | ₹12,29,067 · 99 mo | ₹10,27,541 · 88 mo | ₹8,43,509 · 77 mo | ₹4,57,344 · 55 mo |
Figures rounded to the nearest rupee, at a constant 8.5% rate. Use the calculator above for your own loan.
HOW IT WORKS
How a home loan prepayment saves interest
A home loan charges interest every month on the amount you still owe. Your EMI covers that month's interest first, and only the rest reduces the loan. In the early years the balance is large, so most of each EMI goes to interest. On the example loan above, the first EMI of ₹17,356 includes ₹14,167 of interest and only ₹3,190 of principal.
A prepayment skips that queue. The whole amount comes straight off the principal, so every month after it you are charged interest on a smaller balance. That is why timing matters so much: money prepaid in year one stops interest for nineteen more years, while the same money prepaid in year ten stops it for ten.
The calculator works the loan through month by month. Each month it charges interest on the balance, applies the EMI, then takes off any prepayment due that month: the one-time amount after the EMI number you choose, the monthly extra every month, and the yearly extra after every twelfth EMI. The saving is the interest on your current loan minus the interest with your prepayments.
A shorter loan or a lower EMI?
After a part payment your lender can either keep the EMI the same and end the loan sooner, or keep the end date and lower the EMI. The difference is large. On the example loan, ₹2 lakh prepaid after the 36th EMI saves ₹5,27,855 if you keep the EMI and finish after 16 years 7 months. If you lower the EMI instead, it falls to ₹15,500 and you save only ₹1,78,743, because the smaller EMI repays principal more slowly for the rest of the term. Choose the lower EMI when you need the monthly breathing room; otherwise a shorter loan saves far more. Many lenders shorten the tenure by default, so tell yours which you want.
One lump sum, a monthly top-up or a yearly payment?
The strategy table above compares the habits people actually use. On the example loan, an extra ₹1,500 a month saves ₹4,48,233 and closes the loan after 16 years 6 months, for ₹2,95,500 of extra cash in total. Paying ₹1 lakh after every twelfth EMI, perhaps from an annual bonus, saves ₹11,90,574 and clears the loan in exactly 10 years. Raising the EMI by 5% each year, in step with salary increases, saves ₹7,80,685 and finishes after 12 years 3 months. Compare the interest saved with the extra cash each one needs: the bigger savings come from putting in more money, and from putting it in earlier.
Prepayment charges in India
Lenders cannot charge for prepaying a floating-rate loan taken by an individual for a purpose other than business. Under the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, that holds for part and full prepayment, whatever the source of the money, and with no minimum lock-in period. The Directions apply to loans sanctioned or renewed on or after 1 January 2026; floating-rate home loans to individuals were already free of foreclosure charges under earlier RBI instructions. A fixed-rate loan can carry a charge set out in your loan agreement, so check your sanction letter before you pay.
Before you prepay
Keep an emergency fund of several months' expenses first; money paid into a loan is hard to get back. Clear costlier debt, such as a credit card or a personal loan, before a home loan at a lower rate. If you are on the old tax regime, home loan interest can reduce your tax under Section 24(b), which lowers the loan's real cost and makes prepaying slightly less attractive. Ask your lender for a revised repayment schedule after every prepayment, and check it against the schedule above.
Prepaying versus investing
Prepaying earns exactly your loan rate, with no risk: every rupee prepaid stops interest at that rate. Investing the same money comes out ahead only if it earns more than the loan costs, after tax, and equity returns are never guaranteed. The prepay-or-invest panel above runs both paths for your loan. At an expected return equal to your loan rate the two come out level; above it investing wins on paper, below it prepaying wins. Many borrowers split the difference, prepaying some and investing some. The guide Should you prepay or invest? works through the after-tax version with four examples.
QUESTIONS & ANSWERS
Home loan prepayment — frequently asked questions
Reducing the tenure saves far more. On a ₹20 lakh loan at 8.5% over 20 years, a ₹2 lakh prepayment after the 36th EMI saves ₹5,27,855 in interest if you keep the EMI and let the loan end early, but only ₹1,78,743 if you keep the end date and lower the EMI to ₹15,500. Choose a lower EMI only if you need the monthly breathing room.
Not on floating-rate loans taken by individuals for purposes other than business. Under the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, lenders cannot charge for part or full prepayment of such loans, whatever the source of the money and with no minimum lock-in period. The Directions apply to loans sanctioned or renewed on or after 1 January 2026; floating-rate home loans to individuals were already free of foreclosure charges under earlier RBI instructions. A fixed-rate loan can carry a charge set out in your loan agreement, so check your sanction letter.
As early as you can. Interest is charged on the outstanding balance, so money prepaid early stops interest for every remaining month. On a ₹20 lakh loan at 8.5% over 20 years, ₹1 lakh prepaid after the first year saves ₹3,56,554 in interest; the same ₹1 lakh after the tenth year saves ₹1,23,601.
Compare your loan rate with the return you expect after tax. Prepaying earns exactly your loan rate with no risk. Investing the same money comes out ahead only if it beats that rate after tax, and equity returns are not guaranteed. Under the old tax regime, home loan interest can also reduce your tax under Section 24(b), which lowers the loan's real cost and tilts the comparison towards investing. The prepay-or-invest panel on this page runs both paths for your loan.
Not always. Many lenders apply a part payment to shorten the tenure and keep the EMI unchanged unless you ask for a lower EMI. Tell your lender which you want when you make the payment, and check the revised repayment schedule they send afterwards.
It runs your loan month by month on a reducing balance. Each month it charges interest on the amount outstanding, applies the EMI, and then takes any prepayment straight off the principal. The saving is the total interest on your current loan minus the total interest with your prepayments. It assumes the rate stays the same, so a floating rate that resets will change the figures.
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FURTHER READING
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Read the reasoning behind the numbers.