Home Loan Prepayment Calculator
Planning to make lump-sum prepayments on your home loan? This shows exactly how much interest each prepayment saves, how many years it cuts from your tenure, and a year-by-year comparison of your loan balance with and without prepayment.
For Section 24b interest deduction estimate
Enter 0 in amount to skip a row. Each row = one lump-sum prepayment.
How to use
- Enter your loan amount, interest rate, and tenure.
- Add your planned prepayments - you can add multiple at different points in the loan.
- Choose your tax bracket to also see how much tax you'd save on the interest deduction.
- Hit Calculate to see total interest saved, years cut from your loan, and a full year-by-year table.
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A home loan prepayment is a lump-sum payment made over and above your regular EMI, which directly reduces your outstanding principal. Since home loan interest is calculated on the reducing balance, a lower principal means less interest accrues every subsequent month. Even a single prepayment of ₹2–5 lakhs in the early years of a 20-year loan can save ₹5–10 lakhs in interest and cut 2–4 years off the tenure.
Unlike a generic loan, home loans in India have specific advantages: RBI mandates no prepayment penalty on floating-rate home loans for individual borrowers, and you can claim a deduction of up to ₹2 lakh per year on home loan interest under Section 24(b) of the Income Tax Act. This calculator factors in your tax bracket to show the real net savings from prepayment.
Frequently Asked Questions
Does prepayment reduce EMI or loan tenure?
Most banks in India default to reducing tenure while keeping EMI the same, which saves more interest. Some banks allow you to choose, reducing EMI improves monthly cash flow but you pay interest longer. Always prefer reducing tenure if you can comfortably manage the current EMI.
Is there a penalty for home loan prepayment in India?
RBI rules prohibit prepayment charges on floating-rate home loans for individual borrowers, all major banks (SBI, HDFC, ICICI, Axis, Kotak) follow this. Fixed-rate loans may charge 2–3% of the prepaid amount. Always check your loan agreement before prepaying.
When is the best time to prepay a home loan?
The earlier you prepay, the more interest you save, because the outstanding principal is highest in the initial years. Prepaying in year 1–3 typically saves 3–5x more than the same amount prepaid in year 10–12. Use your annual bonus or savings to prepay early for maximum benefit.
How does Section 24b affect home loan prepayment decisions?
Section 24(b) allows a deduction of up to ₹2 lakh per year on home loan interest for a self-occupied property. If your annual interest payment is already below ₹2 lakh, prepayment reduces interest but doesn't reduce your tax benefit further. If interest is well above ₹2 lakh, prepayment saves interest but the tax deduction remains capped at ₹2 lakh anyway.
Can I make multiple prepayments on a home loan?
Yes, you can make prepayments as many times as you want (most banks allow this without any fees on floating-rate loans). Common strategies: prepay once a year using your annual bonus, prepay whenever you have surplus savings, or make a large prepayment after 5 years once you've cleared other high-interest debts.
Disclaimer: Results are estimates for informational purposes only and do not constitute financial, tax, or investment advice. Figures may vary based on actual terms. Always consult a qualified financial advisor before making financial decisions.