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Home and personal loan prepayment calculator

A lump-sum part-prepayment on a home loan or personal loan reduces what you owe today — but the payoff depends on what you do next, and on any charge your lender takes. See both options: a shorter loan at the same EMI, or a lower EMI at the same tenure.

Method and assumptions: how this is calculated · source

Your loan details

Outstanding principal ₹20,00,000

Interest rate (p.a.) 9%

Remaining tenure 15 years

Prepayment amount ₹3,00,000

Prepayment / foreclosure charge 0%

Enter the charge on your own loan, if any; it is worked out on the amount you prepay. Under the RBI (Pre-payment Charges on Loans) Directions, 2025, lenders cannot charge for part or full prepayment of a floating-rate loan taken by an individual for a non-business purpose, if sanctioned or renewed on or after 1 January 2026. Fixed-rate loans can carry a charge set by the lender, which must be disclosed in your sanction letter, loan agreement and Key Facts Statement.

Add 18% GST on the charge

What prepaying does

Keep EMI, shorten tenure
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Keep tenure, lower EMI

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Current EMI₹0

Original remaining interest₹0

Prepayment charge + GST₹0

Net saving (shorten tenure)₹0

Net saving (lower EMI)₹0

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An estimate, not your lender's amortisation schedule. This assumes your interest rate stays constant, the prepayment is applied immediately and in full to principal, and the only cost is the prepayment charge (and GST) you enter above. Your lender's actual charge is set out in your loan agreement — check it before prepaying.

After the bank’s charges, is prepaying worth it?

If your lender charges for prepayment, the interest you save is not what you keep: the charge is worked out on the amount you prepay, and GST applies on that charge. This is the arithmetic after both.

Two ways to use a prepayment

When you make a lump-sum prepayment, your lender generally lets you choose how the reduced principal is applied:

Keep the EMI the same, shorten the tenure. You keep paying what you're used to, but finish the loan years earlier. This generally saves the most total interest, because you're not paying interest for those extra years at all.
Keep the tenure the same, lower the EMI. Your monthly cash flow eases immediately, but you still pay for the same number of months — so the interest saved is smaller than the first option.

How this calculator works

Reduced principal = Outstanding principal − Prepayment
Shorten tenure: solve for the new number of months at the same EMI, using the reducing-balance formula solved for tenure.
Lower EMI: recompute the EMI on the reduced principal at the same remaining tenure, using the standard EMI formula.

A worked example

₹20,00,000 outstanding at 9% p.a. with 15 years (180 months) remaining, prepaying ₹3,00,000:

The current EMI is about ₹20,285. Keeping that EMI on the reduced ₹17,00,000 principal clears the loan in roughly 132.5 months — about 47.5 months earlier — saving approximately ₹6.6 lakh in interest. Keeping the original 180-month tenure instead lowers the EMI to about ₹17,243, saving a smaller ₹2.5 lakh in interest.

Which option should you pick?

If your monthly budget is comfortable, shortening the tenure almost always saves more in total interest. If cash flow is tight and a lower EMI would meaningfully ease your monthly budget, the second option still saves real money — just less of it. Either is better than not prepaying at all, assuming no penalty applies.

FAQ

Common questions

Is prepayment always the better option than investing the money?

It depends on your loan's interest rate versus what you could realistically earn elsewhere, after tax. For a home loan around 8-9%, many borrowers find prepayment and investing roughly comparable; for a higher-rate personal or card debt, prepaying is usually the clearer win since few investments reliably beat that rate.

Do lenders charge a fee for prepayment?

Not on a floating-rate loan taken by an individual for a non-business purpose, such as a floating-rate home loan, if it was sanctioned or renewed on or after 1 January 2026: RBI's Pre-payment Charges on Loans Directions, 2025 bar charges on part or full prepayment of these loans. Subject to limits at some smaller lenders, the same applies to floating-rate business loans to individuals and small businesses. Fixed-rate loans can carry a charge under the lender's policy, which must be disclosed in the sanction letter, loan agreement and Key Facts Statement. Loans sanctioned earlier follow the terms and rules that applied then — check your own loan documents.

Can I make multiple small prepayments instead of one lump sum?

Yes, and the effect compounds — each prepayment reduces the principal that future interest is calculated on, similar to this calculator, just repeated. Many borrowers prepay opportunistically, for example with a bonus or maturing FD.

Does prepaying affect my credit score?

Reducing debt generally supports a healthy credit profile. Closing a loan entirely removes that account from your active obligations, which can be neutral to positive for your score, though very old, well-managed accounts sometimes contribute positively to credit history length while open.

Should I prepay a personal loan or a home loan first, if I have both?

All else equal, prepay the higher-rate loan first — personal loans typically carry meaningfully higher rates than home loans, so clearing that debt saves more interest per rupee prepaid.

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