See how much interest you save and how much sooner you finish, with a one-time extra payment against your loan.
The extra payment reduces your outstanding principal immediately.
Your EMI stays the same, so the loan is paid off faster.
Simulating the new amortisation schedule gives the reduced total interest.
Interest saved: Original total interest − new total interest after the extra payment
The loan prepayment calculator shows what happens if you pay a lump sum towards the principal of a loan on top of your regular EMIs. It keeps the EMI unchanged and works out how many months sooner the loan closes and how much total interest you avoid.
Indian borrowers often receive lump sums such as an annual bonus, a maturing fixed deposit or proceeds from selling another asset. The question is whether to invest that money or put it into the home loan. This calculator measures the loan side of that choice: the interest you would save and the months of EMIs you would no longer owe.
In this calculator the extra payment is applied at the very start of the loan, straight after it is taken. That is the case where prepayment saves the most, so a prepayment made several years into a real loan will save less than the figure shown.
1. Compute the regular EMI for the original amount, rate and tenure with EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where r = annual rate ÷ 12 ÷ 100.
2. Find the original total interest as EMI × n − P.
3. Subtract the prepayment from the principal to get the new starting balance.
4. Month by month, charge interest = balance × r and reduce the balance by EMI − interest, keeping the EMI unchanged.
5. Count the months until the balance reaches zero and add up the interest charged along the way.
6. Interest saved = original total interest − new total interest; months saved = original tenure − new months.
A prepayment removes principal that would otherwise have been charged interest every month until it was repaid. Money repaid today on a 20-year loan stops earning the lender interest for up to 20 years. Because the EMI stays the same, the part of each EMI that would have gone to interest now goes to principal, so the balance falls faster in every later month too. The effect compounds, and the loan ends years early. In effect, prepaying earns you a return equal to the loan's interest rate, with no market risk.
This calculator applies the extra payment at month zero, which gives the largest possible saving. In a real loan, the same sum paid in year 10 saves less, because fewer months of interest remain on that principal. A useful rule is that the interest saved roughly tracks the remaining tenure over which the prepaid amount would have accrued interest. To model a prepayment made later, use the part-payment calculator with your current outstanding balance and remaining months.
After a prepayment, lenders usually let you either keep the EMI and shorten the tenure, or keep the tenure and lower the EMI. Keeping the EMI saves more interest, because the higher repayment continues to attack principal every month. Lowering the EMI eases monthly cash flow but leaves the loan running for the full term. This calculator models the first option. For floating-rate loans taken by individuals, lenders in India generally do not charge a prepayment penalty, but fixed-rate loans and business loans may carry charges.
Pooja and Arjun take a ₹30,00,000 home loan at 8.6% a year for 240 months, and plan to put ₹3,00,000 from their savings towards principal right at the start.
Answer: Interest saved ₹10,77,237; Tenure reduced by 52 months; New tenure 188 months
Expecting the same saving from a prepayment made late in the loan as from one made at the start.
Choosing a lower EMI instead of a shorter tenure without realising it saves less interest.
Using an emergency fund for prepayment and then having to borrow at a higher rate later.
Ignoring prepayment charges on fixed-rate or business loans.
Prepaying a low-rate home loan while carrying credit card or personal loan debt at a much higher rate.
Deciding whether to put an annual bonus into the home loan.
Comparing the guaranteed saving from prepayment with expected returns from investing.
Estimating how early a loan could close with a planned lump sum.
Showing a family member the long-term effect of a one-time payment.
Does prepaying reduce my EMI or my tenure?
This calculator keeps your EMI the same and shortens your repayment time — this is the more common choice and saves you the most interest. Some banks also let you keep the same repayment time and lower your EMI instead.