EMI Prepayment Calculator — Save Years & Lakhs
See exactly how much interest you save and how many months you cut off your loan by making prepayments. Every extra rupee you pay today saves multiples in interest.
| Month | EMI (₹) | Principal | Interest | Prepayment | Balance |
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What is EMI prepayment and how does it help?
EMI prepayment means paying an amount over and above your regular EMI towards the principal. Since home loan interest is calculated on outstanding principal, even one prepayment early in the tenure saves disproportionately large interest over the life of the loan. A single lump sum of ₹1 lakh in year 1 of a 20-year loan can save ₹3-4 lakhs in interest.
Should I reduce EMI or reduce tenure when prepaying?
Always choose tenure reduction over EMI reduction when you prepay. When you reduce tenure, the principal goes down faster which reduces future interest. When you reduce EMI, you just pay less monthly but the interest savings are minimal. Tenure reduction is almost always the mathematically superior choice.
Should I prepay my loan or invest in SIP?
If your home loan rate is above 9%, prepaying offers a guaranteed risk-free return equal to the loan rate. Equity SIP targets 12-15% but with market risk. General rule: if loan rate is above 9%, prepay. If below 8%, invest in equity SIP. Between 8-9%, do both. Also consider tax benefits on home loan interest under Section 24(b) before prepaying.
Is there a prepayment penalty on home loans?
As per RBI guidelines, banks cannot charge prepayment penalties on floating rate home loans. For fixed rate loans, banks may charge up to 2-3% of the prepaid amount. Always check your loan agreement. Most major banks like SBI, HDFC, ICICI waive prepayment charges on floating rate loans.
What is the best prepayment strategy?
The most powerful strategy is annual step-up: increase your EMI by 5-10% every year as your salary grows. Even a 5% annual EMI hike on a 20-year loan cuts the tenure to about 13-14 years, saving crores in interest. Combine this with lump sum prepayments from bonuses for maximum impact.