Loan Prepayment Calculator India — Interest Savings from Part-Payment

Last updated: 29 April 2026 Reviewed by Arjun Mehta, CA

**Loan prepayment** (part-prepayment) is paying an amount over and above your regular EMI to reduce your outstanding principal. This reduces both the total interest payable and the remaining loan tenure. For a ₹50 lakh home loan at 8.5%, a single prepayment of ₹5 lakh in Year 3 can save over ₹8 lakh in interest and reduce tenure by 2+ years.

Original Loan Amount (₹)

Interest Rate (% p.a.)

Original Tenure (Years)

Prepayment Amount (₹)

Prepayment After (Years) Number of years from loan start

Original EMI —

New EMI (if tenure constant) —

Total Interest Saved —

Months Reduced —

View Year-by-Year Breakdown

Real-World Examples — 2026

₹5 lakh prepayment after 3 years on ₹30 lakh home loan

₹30 lakh at 8.5% for 20 years = EMI ₹26,034. Prepaying ₹5 lakh after 3 years reduces tenure by approximately 38 months and saves ₹7.8 lakh in total interest — a 56% return on the prepayment amount.

Effect on EMI vs tenure

With ₹5 lakh prepayment, you can choose to: (a) keep EMI same and cut tenure by ~3 years, or (b) keep tenure same and reduce EMI to ₹23,060. Most financial advisors recommend keeping EMI same and reducing tenure — you save more interest.

Frequently Asked Questions

Should I prepay home loan or invest the money?

Prepayment is financially equivalent to getting a guaranteed return equal to your loan interest rate. If your home loan rate is 8.5%, prepaying gives you a guaranteed 8.5% after-tax return. Compare this with post-tax returns from other investments. For most equity-shy investors, prepayment is optimal.

Is there a prepayment penalty on home loans?

RBI mandates zero prepayment penalty on floating rate home loans for individuals. Banks cannot charge any fee for partial or full prepayment. Fixed rate home loans may have prepayment charges of 2–4% — check your loan agreement.

When is the best time to prepay — early or late?

Prepaying early in the loan tenure saves more interest because EMI in early years is mostly interest. Prepaying in year 3 of a 20-year loan at 8.5% saves significantly more than prepaying in year 15. The earlier the prepayment, the more interest you save.

Is the Loan Prepayment Calculator free?

Yes, completely free with no registration on CalcPhi.

Are my inputs stored?

No. All calculations run in your browser. We never store your financial data.

Can I use the Loan Prepayment Calculator on mobile?

Yes. CalcPhi works on all modern smartphones and tablets.