Loan Prepayment Calculator
Prepayment is the highest guaranteed return available to an ordinary person. Clearing a 9% loan is a risk-free, tax-free 9% — no fund manager on earth offers that with certainty.
The reason it works so well is that extra money goes straight to principal, skipping the interest queue entirely. Every rupee you prepay early kills all the future interest that rupee would have generated. Put in a modest extra amount and watch what comes off the total — it is usually several times the amount you actually paid.
| Year | Principal paid | Interest paid | Balance left |
|---|---|---|---|
| Year 1 | ₹1,18,719 | ₹2,65,182 | ₹28,81,281 |
| Year 2 | ₹1,29,856 | ₹2,54,045 | ₹27,51,425 |
| Year 3 | ₹1,42,037 | ₹2,41,864 | ₹26,09,388 |
| Year 4 | ₹1,55,361 | ₹2,28,540 | ₹24,54,026 |
| Year 5 | ₹1,69,935 | ₹2,13,966 | ₹22,84,091 |
| Year 6 | ₹1,85,876 | ₹1,98,025 | ₹20,98,214 |
| Year 7 | ₹2,03,313 | ₹1,80,588 | ₹18,94,901 |
| Year 8 | ₹2,22,385 | ₹1,61,516 | ₹16,72,516 |
| Year 9 | ₹2,43,246 | ₹1,40,655 | ₹14,29,270 |
| Year 10 | ₹2,66,065 | ₹1,17,837 | ₹11,63,205 |
| Year 11 | ₹2,91,023 | ₹92,878 | ₹8,72,182 |
| Year 12 | ₹3,18,323 | ₹65,578 | ₹5,53,859 |
| Year 13 | ₹3,48,184 | ₹35,717 | ₹2,05,675 |
| Year 14 | ₹2,05,675 | ₹5,942 | ₹0 |
How it works
- 01The calculator runs your loan twice, month by month: once as scheduled, once with your extra payments applied directly to principal.
- 02Your EMI stays the same. The extra is added on top and reduces the balance faster, so each following month is charged interest on a smaller number.
- 03The difference between the two runs is your saving — in money, and in months of your life not spent making payments.
Frequently asked
Prepay the loan or invest the money instead?+
Compare after-tax numbers. Prepaying a 9% loan is a guaranteed 9%. Equity might return 12% but might return −20% next year. If the loan rate is above roughly 9%, prepaying usually wins on a risk-adjusted basis. Below that, and with a long horizon, investing has the edge. There is no wrong answer — but clear high-interest debt first, always.
When is the best time to prepay?+
As early as possible. In the first years almost your entire EMI is interest, so principal barely moves — that is exactly when extra money does the most damage to the loan. The same prepayment in year fifteen saves a fraction of what it saves in year two.
Will my bank charge a prepayment penalty?+
On floating-rate home loans to individuals, no — regulators have removed that charge. Fixed-rate loans and some business loans can still carry one, typically 2–4%. Check your sanction letter before you transfer anything.
Should I reduce the EMI or the tenure?+
Tenure, almost always. Keeping the EMI and shortening the loan saves far more interest. Reducing the EMI only helps if your monthly cash flow is genuinely under strain.