Paying extra toward your home loan principal — even occasionally — can meaningfully cut the total interest you pay and shorten your loan tenure, because interest is calculated on the outstanding balance. This calculator quantifies that impact.
How to Use This Calculator
- Enter your existing loan details: outstanding principal, interest rate, remaining tenure.
- Enter your planned prepayment — either a one-time lumpsum or a recurring extra monthly amount.
- View a side-by-side comparison: without prepayment vs with prepayment.
How the Calculation Works
The calculator runs the standard amortization schedule twice — once with only the regular EMI, and once applying your extra prepayment(s) to reduce the outstanding principal — then compares total interest paid and the number of months to close the loan in each scenario.
Worked Example
See the calculator above with your actual outstanding balance, rate and prepayment plan — the interest saved and tenure reduction depend heavily on how early in the loan the prepayment is made.
Who Should Use This
Borrowers who have received a bonus, matured investment, or other lumpsum and are deciding whether to prepay their home loan or invest it elsewhere.
Important Considerations
Some loans charge prepayment or foreclosure penalties, particularly for fixed-rate loans (floating-rate home loans in India generally cannot charge prepayment penalties to individual borrowers, per regulatory guidelines, but always confirm with your lender). This calculator does not include any such penalty automatically.
Common Mistakes
Assuming prepayment always reduces the EMI is incorrect — most lenders let you choose whether extra payments reduce the tenure (keeping EMI the same) or reduce the EMI (keeping tenure the same); the interest saved differs between the two options.
References
See also the Loan Foreclosure Calculator for fully closing a loan early.