EMI Prepayment Calculator — How Much Do You Save?

Reduce-tenure almost always saves more total interest because you're killing the longest, most expensive months at the end of the loan. Reduce-EMI lowers your monthly cash outflow, which helps if your salary is tight or you want to invest the freed-up cash. Rule of thumb: if your post-tax investment return beats your loan rate (~9%), reduce EMI and invest the difference. Otherwise, reduce tenure. This calculator shows both side-by-side so you can pick.

Compare your post-tax loan rate to your expected post-tax investment return. A 9% home loan with full Section 24 deduction can effectively cost 6.3% (at 30% slab). If equity SIPs realistically return 11-12% post-LTCG, investing wins mathematically. But prepayment is a guaranteed return — equity is not. Most planners suggest splitting: keep emergency fund + retirement intact, prepay ~30% of surplus, invest 70%.

On floating-rate home loans for individuals, RBI has banned foreclosure and prepayment penalties since 2012. Fixed-rate home loans can still attract a charge (usually 2-4% of the prepaid amount). Personal loans, car loans and business loans typically charge 2-5%. Always read the sanction letter — some banks levy GST on the foreclosure amount itself.

Yes, but think carefully. PPF gives 7.1% tax-free which compares well to a ~9% loan post tax-deduction. Breaking PPF early loses both compounding and the EEE tax shield. Equity SIP redemption depends on holding period — short-term gains are taxed at slab rate, long-term at 12.5%. As a thumb rule, only redeem when the investment return clearly underperforms the loan rate.

This calculator assumes a fixed rate. If your bank's repo-linked rate changes mid-loan, the EMI (or remaining tenure) re-calculates. Re-run this tool with the new rate and the current outstanding principal to project savings going forward. Most prepayment benefits compound — prepaying early in the loan saves disproportionately more interest because of the front-loaded interest curve.

Prepaying does cut your interest paid, which reduces the Section 24 deduction (up to ₹2L/year on self-occupied). For a 30% slab payer, ₹1L of interest saves ₹30K of tax — so the effective benefit of prepayment is interest_saved × (1 - tax_rate). The principal portion already counts toward Section 80C (up to ₹1.5L, shared with EPF/PPF/ELSS). This calculator shows pre-tax savings; reduce by your slab to get post-tax impact.

Early. Indian home loans are front-loaded — in year 1 of a 20-year loan at 9%, ~85% of every EMI is interest. Prepaying ₹1 lakh in year 1 saves much more total interest than ₹1 lakh in year 15, because that lakh would have been generating interest for 19 more years. Move the prepayment month slider in the calculator to see this effect.