Home Loan Prepayment Calculator

Enter your current loan details and prepayment amount to see exact interest savings and tenure reduction. No prepayment penalty on floating rate loans (RBI regulation).

Your Prepayment Savings

Total Interest Saved ₹7,82,340
Tenure Reduction 2 yrs 4 months
Without Prepayment — Total Interest ₹54,13,816
After Prepayment — Total Interest ₹46,31,476
Original Remaining Tenure 18 yrs
New Remaining Tenure 15 yrs 8 months

Prepayment Tip

Making prepayments in the early years of the loan saves the most interest, because the interest component is highest in the beginning of the loan tenure.

Advertisement

GetInfoToYou Financial Tools Team
✍️ Published: January 2024🔄 Last Updated: June 2026

Home Loan Prepayment — Complete Guide 2026

Making a lump-sum prepayment on your home loan is one of the most effective ways to reduce your total interest burden. A ₹5 lakh prepayment in year 3 of a ₹50 lakh loan can save over ₹8 lakh in interest and reduce your loan tenure by 2+ years.

Should I Reduce EMI or Tenure After Prepayment?

When you make a prepayment, banks give you two options:

  • Reduce Tenure (Recommended): Keep EMI the same, reduce remaining loan duration. This saves significantly more interest.
  • Reduce EMI: Keep tenure same, reduce monthly payment. Improves monthly cash flow but saves less interest overall.

Financial experts unanimously recommend reducing tenure unless you're facing cash flow constraints, because you pay off the loan faster and save more on interest.

Prepayment Rules — SBI, HDFC & RBI Regulations

  • Floating rate loans: Zero prepayment penalty for individual borrowers (RBI mandate, 2012)
  • SBI: No prepayment charges on floating rate loans
  • HDFC: No prepayment charges on floating rate loans; fixed rate may have 2% fee
  • ICICI, Axis: No charges on floating rate prepayments

Best Time to Make Home Loan Prepayment

The earlier in the loan tenure you make a prepayment, the more you save. This is because in the early years, your EMI consists mostly of interest. As the loan matures, the principal component increases and interest decreases. A ₹5 lakh prepayment in Year 1 saves significantly more than the same prepayment in Year 15.

Also Read

After making a prepayment, your loan's remaining balance changes. Use our home loan EMI calculator with the new outstanding balance to recalculate your revised EMI schedule. Also read about tax benefits on home loan interest.

Prepayment — Frequently Asked Questions

No. SBI charges zero prepayment penalty on floating rate home loans for individual borrowers, as mandated by the Reserve Bank of India. Similarly, HDFC, ICICI, Axis Bank and all major banks cannot charge prepayment penalties on floating rate individual home loans. Fixed rate loans may carry charges.

Rule of thumb: Any surplus funds (bonuses, investments maturing, gifts) that you don't urgently need should go toward prepayment. The best time is in the first 5 years of the loan when the interest component is highest. Even annual prepayments equal to 1-2 extra EMIs can reduce tenure by 3-5 years.

Compare after-tax returns: Home loan interest rate ~8.5%. If your investments earn more than 8.5% post-tax (e.g., equity mutual funds historically 12-15%), investing may be better. However, the guaranteed "return" from prepayment (saving 8.5% interest) equals a risk-free 8.5% return, which is hard to beat with safe investments. Maintain an emergency fund, then decide based on your risk appetite.