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Loan Prepayment Calculator

For a loan you are already repaying. Enter what you still owe, the interest rate and your EMI, then what you can pay on top: a fixed amount every month, a yearly part-payment from a bonus, or a one-time sum. You see the new closing date, the interest saved and the balance year by year, side by side with not prepaying.

Your loan today

From your latest statement. For a new loan, the loan amount.

I know
What you will prepay

Paid on top of each EMI

Optional, e.g. 5 as your salary grows

Optional, e.g. from an annual bonus

Optional

Counted from now

Enter what you still owe, the interest rate and your EMI, then an extra amount, to see how much sooner the loan closes.

How to use this tool

  1. Enter the outstanding amount from your latest loan statement or the lender's app — what you still owe, not the original loan. For a loan you are about to take, enter the loan amount.
  2. Enter the interest rate you are being charged now. On a floating-rate loan this may differ from the rate in your sanction letter.
  3. Choose whether you know your EMI or the remaining tenure, and enter it. The EMI is the more reliable figure, because lenders often extend the tenure rather than raise the EMI when rates go up.
  4. Enter what you can prepay: an extra amount every month, how much you will raise it each year, a yearly part-payment, or a one-time payment with the EMI number it goes with. Any combination works.
  5. Read the interest saved and the new closing date. Open the year-by-year table to compare the balance with and without prepaying.

Formula and method

Each month

Interest = Balance × r;  Balance falls by (EMI − Interest) + Prepayment
r
— monthly interest rate = annual rate ÷ 12 ÷ 100

Interest is charged only on what you still owe. The EMI covers that month's interest first and the rest reduces the loan. A prepayment reduces the loan directly, so every later month's interest is charged on a smaller balance — the saving keeps compounding until the loan closes.

EMIs left when you know the EMI

n = −ln(1 − B × r ÷ EMI) ÷ ln(1 + r)
B
— outstanding balance
n
— EMIs left, rounded up; the last one is smaller

This is the EMI formula solved for the number of months. It only has an answer when the EMI is larger than the first month's interest, B × r; otherwise the balance would never fall.

Worked examples

₹23 lakh owed at 8.5%, EMI ₹20,000, paying ₹5,000 extra

  1. First month's interest: 23,00,000 × 8.5% ÷ 12 = ₹16,292, so only ₹3,708 of the EMI reduces the loan
  2. Without prepaying: 239 EMIs (19 years 11 months), ₹24,74,915 of interest
  3. With ₹5,000 extra every month: 150 EMIs (12 years 6 months), ₹14,35,290 of interest
  4. Prepaid in total: 149 × ₹5,000 = ₹7,45,000

The loan closes 7 years 5 months early and you pay ₹10,39,625 less interest — about ₹1.40 saved for every rupee prepaid.

The same loan with a ₹1 lakh part-payment each year instead

  1. EMI stays ₹20,000; ₹1,00,000 is paid with every 12th EMI
  2. The balance reaches zero after 125 EMIs (10 years 5 months)
  3. Interest paid: ₹11,96,619 instead of ₹24,74,915

The loan closes 9 years 6 months early, saving ₹12,78,296 in interest for ₹10 lakh prepaid.

Notes and limitations

  • Prepayments are applied the way most banks apply them by default: the EMI stays the same and the tenure gets shorter. If you ask the lender to lower the EMI instead, you save less interest than shown here.
  • The interest rate is assumed to stay at what you enter. Most home loans in India are floating-rate and linked to an external benchmark such as the repo rate, so the real closing date moves whenever the rate changes — re-run the numbers with the new rate from your statement.
  • Each prepayment is assumed to be paid along with an EMI. A lender that applies part-payments on a different date, or charges interest on a daily balance, will give slightly different figures.
  • The closing month counts your next EMI as due next month. Processing fees, insurance bundled with the loan and any prepayment charge are not included.
  • These figures are estimates to help you plan, not financial advice. Your lender's statement is the final word on what you owe and when the loan closes.

Frequently asked questions

How much does paying ₹5,000 extra on a ₹20,000 EMI save?

It depends on how much you owe and the rate. On ₹23 lakh outstanding at 8.5%, a ₹20,000 EMI takes 19 years 11 months to clear the loan. Adding ₹5,000 a month clears it in 12 years 6 months and saves about ₹10.4 lakh of interest. The earlier in the loan you start, the bigger the saving, because that is when most of each EMI goes to interest.

Can the bank charge me for prepaying?

Not on a floating-rate loan taken by an individual for a non-business purpose such as buying a home: RBI rules do not allow banks and NBFCs to charge a prepayment or foreclosure fee on these, whether you prepay part of the loan or all of it. RBI's Pre-payment Charges on Loans Directions of 2 July 2025, which apply to loans sanctioned or renewed from 1 January 2026, also extend this to many business loans taken by individuals and small businesses. Fixed-rate loans can still carry a charge; it must be stated in your sanction letter and Key Facts Statement, so check there before a large part-payment.

Should I reduce my EMI or my tenure after a prepayment?

Reducing the tenure saves more interest, because the EMI keeps pulling the balance down at the same pace while the balance is smaller. Reducing the EMI gives you more room each month. Many lenders shorten the tenure by default; if you want a lower EMI, you usually have to ask.

Is it better to prepay the home loan or invest the money?

Prepaying earns you a return equal to your loan's interest rate, with no risk and no tax on it. An equity SIP may return more over a long period, but the return is not guaranteed and gains are taxed. Many people split the money between the two. Money paid into a loan is hard to get back out, so it is common to set aside an emergency fund before prepaying. The SIP calculator shows the other side of the comparison.

Does prepaying reduce my income tax benefit?

Only if you use the old tax regime and claim the home loan interest deduction, which is capped at ₹2 lakh a year for a house you live in. Prepaying lowers the interest you pay, so the deduction falls once your yearly interest drops below ₹2 lakh. The new tax regime gives no interest deduction for a self-occupied house, so prepaying costs you no tax benefit there.

Can I pay a small extra amount every month?

Many lenders accept it, through the app or by raising your EMI voluntarily, but some set a minimum part-payment — often one or more EMIs — or limit how often you can make one. If yours does, set the extra aside each month and pay it as one larger part-payment every few months; you save slightly less than this calculator shows for monthly payments.

When does prepaying help the most?

In the first few years. Early on, most of each EMI is interest, so a rupee of principal repaid then avoids interest for the longest time. Prepaying in the last few years of a loan still clears it sooner, but there is little interest left to save.

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