Home loan calculator with prepayment: see how much interest you can save
A home loan runs for many years, so small prepayments can save a large amount of interest. This calculator compares your loan with and without prepayment.
How to use this calculator
- Enter the loan amount, the yearly interest rate and the term in years.
- To pay a little extra every month, enter it in 'Extra payment every month'.
- To make a one-time prepayment, such as a bonus, enter the amount and the month number it will be paid.
- Compare total interest and the end date with and without prepayment.
Worked examples
Example 1
₹50,00,000 at 8.75% for 20 years, paying an extra ₹5,000 every month.
You enter
| Loan amount | ₹50,00,000 |
|---|---|
| Interest rate (per year) | 8.75% |
| Term (years) | 20 |
| Extra payment every month | ₹5,000 |
| One-time prepayment | ₹0 |
| One-time prepayment in month number | 24 |
You get
| Monthly EMI | ₹44,186 |
|---|---|
| Total interest, no prepayment | ₹56,04,529 |
| Total interest, with prepayment | ₹41,52,101 |
| Interest saved | ₹14,52,427 |
| Loan ends | 15 years 7 months (4 years 5 months sooner) |
Example 2
The same loan with no monthly extra but a ₹5,00,000 prepayment in month 36.
You enter
| Loan amount | ₹50,00,000 |
|---|---|
| Interest rate (per year) | 8.75% |
| Term (years) | 20 |
| Extra payment every month | ₹0 |
| One-time prepayment | ₹5,00,000 |
| One-time prepayment in month number | 36 |
You get
| Monthly EMI | ₹44,186 |
|---|---|
| Total interest, no prepayment | ₹56,04,529 |
| Total interest, with prepayment | ₹42,20,063 |
| Interest saved | ₹13,84,465 |
| Loan ends | 16 years 6 months (3 years 6 months sooner) |
How it works
Interest is charged every month on the balance still owed. A prepayment cuts the balance at once, so every later month charges less interest. The earlier the prepayment, the bigger the saving.
Lenders differ on what a prepayment does. Some shorten the term and keep the EMI; others lower the EMI. This tool shows the shorter-term case, which saves the most interest. Ask your lender about prepayment charges, which are usually nil on floating-rate home loans for individuals but can apply on other loans.
Formula
Each month: interest = balance x monthly rate; principal paid = EMI - interest + any extra payment; new balance = balance - principal paid.
Common questions
Is it better to prepay or invest the money?
It depends on the loan rate, the return you can expect after tax and risk, and your comfort with debt. Prepaying gives a certain 'return' equal to the loan rate; investing may earn more or less.
Does this include tax benefits?
No. Tax rules on home loans change, so check the current rules.
What if my rate is floating?
Run the calculator at a few rates to see the range.
Learn more
Read the lesson Understanding and managing debt on pusaram.com for the ideas behind this calculator.
Calculators give estimates for learning and planning. They are not financial, tax, legal or medical advice, and results depend entirely on the numbers you enter. Check rates, limits and rules with an official source or a qualified professional before acting.