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EMI Preclosure Calculator
Find out how much interest and time you can save by prepaying your loan early.
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See how much interest you save by making extra payments towards your loan principal
Loan Details
Preclosure Plan
Find out how much sooner you can be debt-free by making small extra payments.
Pro Tip: Banks usually charge no penalty for part-prepayment on floating rate home loans. Even a ₹5,000 monthly extra payment on a 25-year loan can save you lakhs in interest and reduce your tenure by several years.
The Power of Part-Prepayment
Most people think of their home or car loan as a 20-year commitment that cannot be changed. However, the secret to becoming debt-free much faster lies in Principal Prepayment or Loan Foreclosure.
When you make a loan part-payment over and above your regular EMI, the entire amount goes directly towards reducing your Outstanding Principal. This reduces the base on which future interest is calculated, leading to a massive "snowball effect" of interest savings.
How Much Can You Really Save?
Consider a ₹50 Lakh home loan at 9% interest for 20 years. Your total interest would be roughly ₹58 Lakhs (more than the actual loan itself!).
Benefit 1: Interest Saving
By paying just ₹10,000 extra every month, you could save over ₹25 Lakhs in interest payout over the life of the loan.
Benefit 2: Tenure Reduction
That same ₹10,000 extra payment would reduce your 20-year (240 months) tenure by nearly 7 years (84 months).
When Should You Prepay?
The best time to prepay is as early as possible. Because of the way reducing balance interest works, your interest component is highest in the first few years of the loan. Prepaying in the 2nd year saves much more money than prepaying the same amount in the 15th year.
Frequently Asked Questions
Do banks charge a penalty for pre-payment?▼
As per RBI guidelines, banks in India cannot charge any foreclosure or pre-payment penalties on floating-rate home loans and other consumer loans. However, fixed-rate loans might still attract a penalty (usually 2-3%). Always check your loan agreement.
Is it better to reduce EMI or Tenure?▼
From a purely mathematical standpoint, reducing your tenure is much more beneficial as it maximizes your interest savings. Reducing EMI gives you more monthly cash flow but doesn't save as much in the long run. Our calculator assumes you keep the EMI same and reduce the tenure.
Should I invest my extra cash or prepay my loan?▼
If your loan interest rate is 9% and you can earn 12% from an investment, investing might seem better. However, loan interest is a "guaranteed" expense, while investment returns are not. For many, the peace of mind of being debt-free is more valuable than a 2-3% potential return delta.