Home Loan Prepayment Savings Calculator
Discover how much interest and time you can save by making extra payments towards your home loan principal.
Current Loan Details
Prepayment Strategy
Assume paid immediately.
Amount paid extra every single month.
Your Potential Savings
By choosing to pre-pay, here is the impact on your loan.
Why Use a Home Loan Prepayment Calculator?
A home loan is often the largest financial liability for an individual, typically spanning 15 to 30 years. Because of the way EMI amortization works, the interest component is extremely high in the initial years. Even a small prepayment can result in massive interest savings over the loan's life.
Our Home Loan Foreclosure Calculator helps you visualize exactly how much money and time you save by injecting lump sum amounts (like annual bonuses) or paying just a little bit extra every month.
How Home Loan Prepayment Works
When you pay your regular EMI, a portion goes toward interest, and the rest goes toward reducing the principal. However, when you make a prepayment, 100% of that amount goes directly toward reducing your principal balance. Since your future interest is calculated on this reduced principal, your total interest payout drops significantly.
Lump Sum Prepayment vs. Extra EMI
- Lump Sum Prepayment: Best for when you receive a yearly bonus, tax refund, or sell an asset. Putting a large chunk of money at once drastically reduces the principal.
- Extra Monthly EMI: Best for disciplined savings. Adding just 5% to 10% extra to your EMI every month can shave years off your loan tenure.
Frequently Asked Questions
When you make a prepayment (lump sum or extra EMI), the entire amount goes directly towards reducing your principal amount. Since interest is calculated on the outstanding principal, a lower principal means you pay less interest over the remaining tenure.
To maximize your financial savings, you should always choose to reduce your loan tenure while keeping the EMI amount the same. Reducing the EMI provides immediate cash flow relief but will not save you as much overall interest in the long run.
As per RBI guidelines in India, banks and housing finance companies cannot charge prepayment penalties or foreclosure charges on floating-rate home loans for individual borrowers. However, if you have a fixed-rate home loan, the bank may levy a prepayment charge of 1% to 3%.