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Loan Prepayment Calculator
What a lump sum saves, and whether to cut the tenure or the EMI.
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Result
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Putting a lump sum into a loan buys a guaranteed, tax-free return equal to the loan's interest rate. Very little else offers that with no risk.
Tenure or EMI
Keeping the EMI and shortening the tenure saves far more interest, because the balance falls away faster. Reducing the EMI frees monthly cash flow instead. The calculator shows both so the trade-off is explicit rather than left to the bank's default.
When prepaying is the wrong call
If the money would otherwise clear a personal loan at 14%, or a credit card balance, that comes first. If your emergency fund is thin, fill it before prepaying — a prepayment cannot be reversed when you need cash.
The rules
Floating-rate home loans to individuals carry no prepayment penalty by regulation. Fixed-rate loans usually do. Ask the lender to confirm in writing whether the prepayment reduces tenure or EMI, and get the revised schedule.
Frequently asked questions
Is it better to reduce the EMI or the tenure?
Reducing the tenure saves far more interest, because the balance falls away faster. Reducing the EMI frees monthly cash flow instead. The calculator shows both so the trade-off is explicit rather than left to the bank's default.
Should I prepay my home loan or invest the money?
Prepaying gives a guaranteed, tax-free return equal to the loan rate. Compare that with what the money would earn elsewhere after tax, not before. At an 8.6% loan, an investment would need roughly 12.5% pre-tax at the 30% slab to beat it.
Is there a penalty for prepaying?
Floating-rate home loans to individuals carry no prepayment penalty by regulation. Fixed-rate loans usually do, and business loans often do. Confirm with the lender in writing before transferring.
When should I not prepay?
When higher-cost debt is outstanding, or when your emergency fund is thin. A prepayment cannot be reversed when you need cash, and a personal loan at 14% costs far more than a home loan at 8.6%.