Home Loan Prepayment Calculator: Reduce EMI or Tenure (2026)

October 17, 2026

Paying even a small lump sum towards your home loan early in its life can cut years off the loan and lakhs off the interest. This calculator shows exactly how much, for your own loan, whether you choose to finish earlier or keep the tenure and lower your EMI.

[Use the Loan Prepayment Calculator above ↑] — enter your outstanding balance, rate and remaining tenure, then add a one-time part-payment, a monthly extra, or both.

How the Calculator Works

It runs your loan month by month on a reducing-balance basis, which is how banks charge interest on home loans. Each month, interest is charged on what you still owe, your EMI covers that interest first, and the rest reduces the principal. A prepayment goes straight to principal, so every later month’s interest is calculated on a smaller balance. That is why the same ₹5 lakh saves far more in year one than in year ten.

Reduce Tenure or Reduce EMI: Which Saves More?

Reducing the tenure saves far more interest, because you keep paying the same EMI against a smaller balance. Reducing the EMI eases your monthly cash flow but leaves you in debt for the original term. Here is a worked example on a ₹50 lakh loan at 8.75% for 20 years (EMI ₹44,186), with a ₹5 lakh part-payment after the 12th EMI:

Choice	New tenure	EMI	Interest saved
No prepayment	20 yrs	₹44,186	–
Keep EMI, finish earlier	15 yrs 11 mo	₹44,186	about ₹16.9 lakh
Keep tenure, lower EMI	20 yrs	about ₹39,680	about ₹5.3 lakh

If you can afford the current EMI comfortably, keep it and shorten the tenure. Choose the lower EMI only if your monthly budget is tight or you want a buffer for other goals.

Timing Matters More Than the Amount

Early in the loan most of your EMI is interest, so a prepayment there removes interest that would have compounded for years. On the same loan, a ₹5 lakh part-payment saves very different amounts depending on when you make it:

Part-payment (after EMI no.)	New tenure	Interest saved
₹2 lakh after EMI 12	18 yrs 3 mo	about ₹7.7 lakh
₹5 lakh after EMI 12	15 yrs 11 mo	about ₹16.9 lakh
₹5 lakh after EMI 120 (year 10)	18 yrs	about ₹6.0 lakh
₹10 lakh after EMI 12	12 yrs 11 mo	about ₹27.9 lakh

Waiting to prepay costs real money: the same ₹5 lakh saves roughly a third as much at year ten as at year one. If you plan to prepay, doing it sooner beats doing it bigger later.

Small Monthly Extras Add Up

You do not need a lump sum. On the same ₹50 lakh loan, paying ₹5,000 extra every month from the start brings the loan down to about 15 years 7 months and saves about ₹14.5 lakh in interest. Paying ₹10,000 extra shortens it to about 12 years 10 months and saves about ₹22.7 lakh. Use the “Extra every month” box in the calculator to try your own figure.

Are There Prepayment Charges?

Under RBI’s pre-payment charges directions, lenders cannot charge prepayment or foreclosure fees on floating-rate loans to individuals for non-business purposes, and this applies whatever the source of the money. The directions cover loans sanctioned or renewed on or after 1 January 2026. Individual home loans on floating rates have also been exempt under earlier RBI rules, so most floating-rate borrowers will not face a fee.

Fixed-rate loans are different: any charge is set by the lender’s policy and should appear in your sanction letter. Check that document, or ask your lender for a written foreclosure statement, before you pay.

Before You Prepay: Check These First

Keep an emergency fund. Money paid into a home loan cannot easily be taken back out. Hold 6 months of expenses in liquid savings before prepaying.
Clear costlier debt first. Credit card balances and personal loans charge much more than a home loan, so prepay those before your home loan.
Compare with what the money could earn. If your loan rate is 8.75%, prepaying is a guaranteed 8.75% return, before tax effects. Whether an investment beats that after tax and risk is your call, but a guaranteed return is hard to match.
Mind the tax effect. Prepaying lowers your interest, which can reduce the home loan interest deduction you claim under the old tax regime (Section 24(b)). Under the new regime this deduction is not available for a self-occupied home, so check which regime you use.
Confirm the option with your lender. Some lenders reduce tenure by default after a part-payment, and some require a written request to reduce EMI instead.

Frequently Asked Questions

Is it better to prepay a home loan or invest?
Prepaying gives a guaranteed return equal to your loan rate. Investing may earn more but carries risk and is taxed. A balanced approach is to build an emergency fund first, then split extra cash between the two depending on how comfortable you are with debt.

Does a part-payment reduce EMI or tenure?
You choose, and the calculator shows both. Reducing tenure saves more interest. Reducing EMI helps your monthly budget. Confirm with your lender how it applies the payment.

Is there a minimum amount for a part-payment?
Many lenders set a minimum, often a multiple of the EMI, though the rule varies by lender. Check with yours.

Can I prepay in the first year?
RBI rules do not impose a lock-in on floating-rate loans to individuals. Early prepayment is also when it saves the most interest.

Why does my bank’s figure differ slightly?
Banks may round EMIs, change rates on floating loans over time, and charge interest on different day-count conventions. This calculator uses your rate throughout, so treat it as a close estimate.

Sources: RBI Pre-payment Charges Directions, 2025. Verified October 2026. Rules and your lender’s terms can change, so confirm with your lender before prepaying.