How the Home Loan Prepayment Calculator Works
Enter your current outstanding principal — the figure on your latest statement, not the amount you originally borrowed — along with your rate and the years remaining.
Add a lump sum, a monthly top-up on your EMI, or both, and set when the lump sum will be paid.
Choose whether to keep the EMI and shorten the loan, or keep the end date and lower the EMI. On a long home loan the difference between these two is usually large.
Because home loans run 15 to 30 years, the interest saved on an early prepayment is often several times the amount prepaid. The calculator simulates every month, so the timing of your prepayment is reflected accurately.
If your bank raised your rate and extended your tenure instead of raising your EMI, a prepayment is an effective way to pull the end date back.
Formula Used
The loan is simulated month by month, with the prepayment applied at the month you specify:
Each month: Interest = Balance × r, Principal = EMI − Interest, Balance = Balance − Principal (− Prepayment)- BalanceOutstanding home loan principal at the start of the month
- rMonthly interest rate (annual rate ÷ 12 ÷ 100)
- EMIYour regular instalment, plus any monthly top-up
- PrepaymentThe lump sum, applied in the month you choose
Example Calculation
Suppose you owe 30,00,000 at 8.5% with 15 years left, and you prepay 3,00,000 six months from now while keeping the same EMI.
- Outstanding Amount3,000,000
- Interest Rate8.5% p.a.
- Remaining Tenure15 years
- Lump Sum300,000 after 6 months
- StrategyReduce tenure
- ResultInterest saved ≈ 6,19,310 · Loan closes 31 months early (12 years 5 months instead of 15 years)
Important Assumptions
- The interest rate is assumed to stay fixed for the remaining tenure. Most home loans are floating-rate and linked to an external benchmark, so your actual saving will move with the rate.
- Lenders generally cannot levy foreclosure or prepayment charges on floating-rate home loans taken by individuals for non-business purposes. Fixed-rate home loans may still carry a charge — check your sanction letter.
- The lump sum is applied immediately after that month's EMI and is capped at the outstanding balance.
- The calculator shows interest savings before tax. If you claim a deduction on home loan interest, your effective saving from prepaying is somewhat lower than the figure shown.
- Banks differ in how quickly they credit a part-payment and whether they reset the EMI or the tenure by default. Confirm with your lender which one they'll apply.