Loan prepayment calculator
If I prepay a lump sum, how many EMIs does it remove and how much interest does it save?
What is owed at the start of this model. Prefilled with the balance left on your loan.
When the prepayment lands. Early is worth far more than late — the interest is front-loaded.
The lump sum, paid once.
Shortening saves more interest. Lowering the EMI buys monthly room instead.
19 monthsoff the loan
- Interest saved
- ₹6,24,429
- Loan closes after
- 221 months
- EMI stays at
- ₹43,391
- Owed just before you prepay
- ₹47,92,181
Shortening removes months of interest outright, which is why it saves more than lowering the EMI.
- Still owed
- Removed by the prepayment
| Year | Owed without prepaying | Owed after prepaying | Removed |
|---|---|---|---|
| 1 | ₹49,00,489 | ₹49,00,489 | ₹0 |
| 2 | ₹47,92,181 | ₹47,92,181 | ₹0 |
| 3 | ₹46,74,300 | ₹44,57,634 | ₹2,16,666 |
| 4 | ₹45,46,000 | ₹43,11,195 | ₹2,34,805 |
| 5 | ₹44,06,359 | ₹41,51,812 | ₹2,54,547 |
| 6 | ₹42,54,375 | ₹39,78,340 | ₹2,76,035 |
| 7 | ₹40,88,957 | ₹37,89,536 | ₹2,99,421 |
| 8 | ₹39,08,918 | ₹35,84,042 | ₹3,24,876 |
| 9 | ₹37,12,965 | ₹33,60,385 | ₹3,52,580 |
| 10 | ₹34,99,691 | ₹31,16,959 | ₹3,82,732 |
| 11 | ₹32,67,566 | ₹28,52,016 | ₹4,15,550 |
| 12 | ₹30,14,923 | ₹25,63,655 | ₹4,51,268 |
| 13 | ₹27,39,949 | ₹22,49,805 | ₹4,90,144 |
| 14 | ₹24,40,670 | ₹19,08,214 | ₹5,32,456 |
| 15 | ₹21,14,937 | ₹15,36,429 | ₹5,78,508 |
| 16 | ₹17,60,412 | ₹11,31,781 | ₹6,28,631 |
| 17 | ₹13,74,550 | ₹6,91,367 | ₹6,83,183 |
| 18 | ₹9,54,582 | ₹2,12,024 | ₹7,42,558 |
| 19 | ₹4,97,492 | ₹0 | ₹4,97,492 |
| 20 | ₹0 | ₹0 | ₹0 |
A part-payment does not shave a little off every future EMI — it deletes months from the far end of the loan, where the balance would otherwise still be earning the bank interest. That is why a lump sum that looks small against the outstanding amount can buy back a year or more of payments, and why the same money is worth several times as much in year two as it is in year twelve.
A worked example
Take the figures the page opens on: a ₹50,00,000 home loan at 8.5% over 20 years, two years of EMIs already paid, and a ₹2,00,000 bonus put into the loan with the tenure shortened rather than the EMI.
Twenty-four EMIs in, the balance is ₹47,92,181 — barely ₹2 lakh off a ₹50 lakh loan, because almost everything paid so far was interest. The ₹2,00,000 goes straight against that balance. The EMI does not move: it stays at ₹43,391, and the loan closes after 221 months instead of 240. Nineteen EMIs never happen, and once the ₹2,00,000 you handed over is netted off, that is ₹6,24,429 of interest you do not pay.
| Shorten the loan | Lower the EMI | |
|---|---|---|
| EMI after | ₹43,391 — unchanged | ₹41,580 |
| Loan closes | Month 221, 19 EMIs early | Month 240, unchanged |
| Interest saved | ₹6,24,429 | ₹1,91,176 |
| Monthly room gained | Nothing | ₹1,811 a month |
₹50,00,000 at 8.5% for 20 years, 24 EMIs paid, ₹2,00,000 prepaid — the two modes of the calculator above, same inputs.
Move only the date and the answer changes completely. The lump sum, the loan, the rate and the tenure are identical in every row below; all that differs is how many EMIs had been paid when the money went in.
Interest is charged on what is still outstanding, so a prepayment is worth most when the outstanding amount is largest. Waiting for a 'better' bonus costs more than the bonus grew.
What this number does not account for
Charges, if your loan has them
A fixed-rate loan can carry a part-payment or foreclosure charge, and GST may apply to it. Nothing here is netted off the saving.
The day the money lands
The model credits the balance the moment you pay. Lenders often apply a part-payment on the next EMI date and many set a minimum, so a few weeks of interest still accrue.
A rate that will move
A floating loan is repriced at every reset. This holds 8.5% for the whole tenure, so a real loan closes a little earlier or later than the month shown.
Four more things sit outside the calculation. Tax: in the old regime, less interest means a smaller section 24(b) deduction, and the principal you prepay competes for the same ₹1.5 lakh section 80C limit as your EPF and insurance — under the new regime neither applies to a self-occupied house, so the saving is the whole story. Reducing versus flat: this is a reducing-balance loan, where interest is charged on what you still owe; a flat-rate quote from a dealer or an NBFC charges it on the original amount throughout, and prepaying such a loan often saves nothing at all because the interest was fixed at sanction. A lower EMI is a request, not automatic: most lenders shorten the tenure by default and want a written instruction — sometimes a conversion fee — to recalculate the instalment instead. Rupees are not discounted: ₹6,24,429 is nominal — nineteen instalments that would have fallen in the nineteenth and twentieth years of the loan, less the ₹2,00,000 paid today — not what that money is worth today, and the closing month is rounded up to a whole EMI, as your lender’s final instalment will be.
Two figures the calculator cannot know: whether the lump sum should have gone to a costlier loan first — a personal loan or a card balance carries a far higher rate than a home loan at 8.5%, and outranks it every time — and whether you still have three to six months of expenses in hand after paying it. A prepayment is irreversible; a bank will not give it back when the car needs a gearbox.
Work it out further
- Home loan EMI — the instalment, the total interest and the year-by-year balance this prepayment is carving into.
- Lumpsum — the other side of the choice: what the same ₹2,00,000 would grow to if you invested it instead of prepaying.
- EMI — any other loan, so you can check whether the home loan is really the expensive one to attack first.
Do banks charge a penalty for prepaying a home loan?
For a floating-rate loan taken by an individual for a non-business purpose, the Reserve Bank's directions on pre-payment charges bar the lender from levying foreclosure or part-payment charges, whatever the source of the money. Fixed-rate loans are not protected the same way and commonly carry a charge of a few per cent of the amount prepaid, and a business or top-up loan may be treated differently again. Read the "prepayment" clause of your sanction letter, because this calculator assumes the charge is zero.
Should I reduce the tenure or reduce the EMI when I part-pay?
Shortening the loan saves far more interest, because you stop paying altogether in the months you removed. Lowering the EMI keeps the closing date and hands you the difference every month instead. On the page defaults the same ₹2,00,000 saves ₹6,24,429 in interest if the tenure shortens, against ₹1,91,176 if the EMI drops to ₹41,580. Choose the smaller saving only if the monthly room is what you actually need — and say which you want in writing, since most lenders default to keeping the EMI and shortening the loan.
When is the best time to prepay a home loan?
As early as you can, because interest is charged on the outstanding balance and the balance is highest at the start. On the page defaults ₹2,00,000 paid two years in removes 19 EMIs and ₹6,24,429 of interest; the identical ₹2,00,000 paid twelve years in removes 8 EMIs and ₹1,47,128. Nothing about the loan changed except the date.
Is it better to prepay the loan or invest the money?
Prepaying earns you a certain, tax-free return equal to your loan rate. Investing has to beat that rate after tax and after risk to be the better call, so compare your loan rate with a return you would actually bet on, not a hoped-for one. Two things tilt it: if you claim home-loan interest under section 24(b) of the Income-tax Act in the old regime, your effective loan cost is lower than the sticker rate, and a lump sum should never come out of the emergency fund — the loan will still be there next month, the job may not be.
Does prepaying reduce my tax deduction?
It can, in the old regime. Section 24(b) lets a self-occupied borrower deduct home-loan interest up to ₹2 lakh a year, and prepaying lowers the interest you pay, so a large part-payment can push you under that cap and give back part of the benefit. Principal repaid, including a part-payment, counts towards the section 80C limit of ₹1.5 lakh, which most families already fill from EPF and insurance. Under the new regime (section 115BAC) neither deduction is available for a self-occupied house, so there is nothing to lose by prepaying.
This page starts from typical figures. In Hundo the same calculator opens on your own — the loan, the deposit, the salary already on the ledger — and says where each number came from.