Loan Prepayment Calculator

Reducing tenure saves significantly more interest and eliminates debt faster — strongly recommended if you can afford the current EMI. Reducing EMI improves monthly cash flow but results in less overall savings. Financial advisors generally recommend tenure reduction over EMI reduction.

As per RBI guidelines: floating rate home loans from banks have zero prepayment penalty for individuals. Fixed rate loans may charge 2–5%. NBFCs can charge prepayment fees even on floating rate loans. Always check your loan agreement before prepaying.

Early in the loan tenure — the first 5 years. During initial years, the interest component of your EMI is highest (often 80–85%). Prepaying early means your future EMIs have more principal component, saving more interest overall.

Most banks allow unlimited part-prepayments on floating rate home loans. Some banks restrict frequency (e.g., twice a year) or set minimum prepayment amounts (e.g., 3× EMI). Check your loan terms. Consistent small prepayments (annual bonus, for example) compound significantly over time.

Compare your loan interest rate vs expected investment returns after tax. If your home loan is at 8.5% and you're in the 30% tax bracket, the effective post-tax savings from prepayment is 8.5%. If equity SIP can give 12%+ post-tax, investing wins. For risk-averse individuals, prepayment provides guaranteed savings.