How much does prepaying save?
Got a bonus or some savings? Putting it towards your loan is a guaranteed way to cut interest. This loan prepayment calculator compares your loan as it stands with two choices after a prepayment: keep the same EMI and finish years earlier, or keep the same end date with a smaller EMI. Add a regular extra amount each month to see how small top-ups add up.
How to use it
- Enter the original loan amount, interest rate and tenure.
- Enter a one-time prepayment and when you'll make it, and/or an extra monthly amount.
- Compare total interest and tenure across the options.
Example
A ₹30 lakh home loan at 8.5% for 20 years has an EMI of about ₹26,035 and total interest of about ₹32.5 lakh. Prepaying ₹5 lakh after 2 years and keeping the EMI finishes the loan68 months earlier and saves about ₹12.9 lakh of interest. Keeping the tenure instead drops the EMI to about ₹21,507 but saves only ₹4.8 lakh. Even ₹5,000 extra a month from the start saves about ₹11.7 lakh and 76 months. Check your EMI first with the EMI calculator.
Tips
- Ask the bank to reduce tenure rather than EMI when you prepay, if you can afford the EMI.
- Keep 6 months of expenses as an emergency fund before prepaying.
- Remember the tax deduction on home-loan interest under the old regime when comparing with investing.
Disclaimer: Results are estimates for educational purposes only and are not financial, investment or tax advice. Please verify with your bank, broker or a SEBI-registered adviser before acting. Read the full disclaimer.