Loan Prepayment Calculator
See how making extra monthly payments or small lump-sum prepayments knocks years off your home loan and saves lakhs in interest.
Prepayment Strategy Inputs
How much time and interest do you save?
By contributing an extra ₹5,000/month and a one-time prepayment of ₹50,000, you shorten your loan by 6.1 years (73 months) and save ₹13,56,637 in total interest!
- Prepayments go 100% toward principal reduction, instantly lowering the base upon which all future compound interest is calculated.
- Prepaying in the first 5 years of a 20-year loan produces 3x greater interest savings than prepaying in the final 5 years.
- Check with your Indian lender that prepayments are tagged directly to Principal Reduction rather than advancing upcoming EMIs.
How This Calculator Works
Because interest each month is calculated on the remaining balance (Balance × Monthly Rate), every rupee of prepayment reduces the balance, shrinking subsequent interest charges and speeding amortization.
New Principal_t = Balance_(t-1) - (EMI + Extra - Interest_t)Variables in Formula:
Worked Step-by-Step Example
On a ₹35 Lakh home loan with 20 years left at 8.5%, paying an extra ₹5,000 every month and ₹50,000 upfront.
Key takeaway: An extra ₹5,000 per month saves nearly ₹10 Lakhs in interest and frees you from debt nearly 5 years ahead of schedule.
Common Mistakes to Avoid
⚠ Prepaying with emergency money
Home loan prepayment cannot be easily undone or withdrawn if you suddenly face an emergency. Retain 6 months of liquid reserves first.
⚠ Ignoring prepayment penalties on fixed-rate loans
While RBI mandates zero prepayment penalty on floating-rate home loans for individual borrowers, fixed-rate loans may carry charges.
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