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Home Loan Prepayment Calculator
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What is Home Loan Prepayment ?

We bring to you a prepayment calculator to gauge the impact of a partial prepayment of your home loan. A partial prepayment lets you reduce your home loan tenure, EMI or both, as per your financial needs. This calculator shows you your savings by reducing your tenure. It will also provide you an amortization table to better understand the savings!

If you want to reduce your EMI after the partial prepayment, you can talk to your bank and get the same done.

What is Partial Prepayment?

When you have financial liquidity due to maybe an unexpected bonus, you can choose to partially repay your home loan. This is called Partial Prepayment. It can be done in two ways,
- Do a lump sum repayment of your loan or,
- Repay lump sum amounts at monthly intervals

Whichever option you choose, here you can calculate the impact of this partial prepayment on your home loan and take the best decision towards a stronger financial future!

Extra income coming from annual bonuses or windfall gains can save you a lot of money if you use it wisely. If you have extra money, then prepaying your home loan can be a great option for reducing your financial burden. However, make sure that you keep aside some funds for unexpected expenses. You don't want to find yourself in an emergency without access to any funds.
Investing in the share market entails a lot of risk and you might not have the stomach for it if you want to invest your bonus just this once. A better option for investing is Fixed Deposit schemes and government bonds. As the interest rates on loans are higher than the interest rates on deposits (otherwise everyone would take a loan, put that money in FDs and make a nice profit), it only makes sense to invest if your loan interest amount has been sufficiently repaid and you are mostly paying back the principal amount. Confused? Let me explain. When you start paying your EMIs, the interest component constitutes a greater part of the EMI and the principal component is small. Over time, the interest component declines and the principal component increases. If you are nearing the end of your loan tenure, then there won't be much interest amount left to save on in the first place. Investing your bonus in an FD will be a better option in this case.
Prepayment can be done in two ways : Full and Partial. Partial prepayment is a great way for you to reduce the interest amount you pay on your home loan by using the extra cash that comes your way. Say, you just got you annual bonus or one of your FDs matured, why not use this to partially prepay your loan and reduce the outstanding amount? Banks allow a certain number of prepayments through the year without charging a penalty as long as your loan is in the fixed rate period.
A lot of salaried Indian consumers find themselves in this situation. At some point in time they have taken a car loan as well as a home loan and they get stuck wondering which one they should prepay first. The thumb rule is, 'Close the most expensive loan first'. Now how do you judge which loan is more expensive? It can be tempting to prepay the loan with highest EMI first but that isn't the only factor to consider. Interest Rate, Tax Benefits and prepayment penalties are some of the things that you need to weigh in both the loans and then calculate which prepayment gives you the most savings. Home loans have high EMIs but they give strong tax benefits on both principal amount and interest. Compared to this, car loans a have no tax benefits unless you are self employed. The interest rate on home loans is also lower than car loans. Therefore, it's a much better idea to prepay the car loan before the home loan in spite of the prepayment penalty charged on the car loan.
According to RBI, lenders cannot charge a prepayment penalty once the home loan enters the floating rate period. If the loan is still in the fixed rate period, lenders can charge a penalty.