What is a home loan prepayment calculator?
A home loan prepayment calculator shows you how extra payments cut both time and cost on your loan. You type in the amount you still owe, the interest rate, the sum you can prepay, and how often you can pay it. This tool is free and works online on any device.
In seconds, the tool gives the new EMI, the revised loan period, and the total interest saved. With these clear numbers, you can judge if prepayment suits your budget and future plans. You can change the inputs anytime to test different amounts. Using the home loan prepayment calculator helps you manage your loan wisely and keep more money in your pocket.
How does a Home Loan Prepayment Calculator work?
Here’s a step-by-step guide on how a home loan prepayment calculator works:
- Step 1: Enter outstanding loan amount: Input the remaining balance of your home loan. This is the amount you still owe to the lender.
- Step 2: Enter loan tenure: Provide the remaining tenure of your loan in months or years. This is the period left for your loan repayment.
- Step 3: Enter rate of interest: Input the current interest rate applicable to your home loan. This rate affects your EMI calculation.
- Step 4: Enter part-prepayment amount: Specify the amount you plan to prepay. This is the extra payment you intend to make towards your loan principal.
- Step 5: Calculate: Click on the ‘Calculate’ button. The calculator will process the information and display your new EMI amount.
- Step 6: Review results: The calculator will show your revised EMI, total interest saved, and the new loan tenure if applicable.
Using this tool helps you understand the financial impact of making a part-prepayment on your home loan, allowing you to plan your finances better.
How to Calculate Home Loan Repayments with help of a Formula?`
The formula to calculate home loan prepayment typically involves calculating the new outstanding loan balance after making the prepayment. Here's the general formula:
Prеpaymеnt Savings = (p × t × (1+t)^x) / ((1+t)^x - 1) - (EMI × x)
Here:
P = Principal loan amount
T = Monthly intеrеst ratе
x = Rеmaining loan tеnurе in months
EMI = Equatеd Monthly Installmеnt
Example calculation using the home loan prepayment calculator
Let us look at an example of how you can calculate the home loan prepayment.
- Loan amount: Rs. 30,00,000
- Interest rate: 9.25 percent
- Loan tenure: 25 years
- Planned prepayments: Rs. 2,00,000 each at months 6, 12, and 18
Results:
- Original EMI: Rs. 25,691
- New EMI after prepayment (if you reduce EMI): Rs. 20,496.96
- Total interest without prepayment: Rs. 47,07,436.58
- Total interest with prepayment: Rs. 38,11,540.07 (while reducing EMI) or Rs. 20,53,594.11 (while reducing tenure)
- Interest savings: Rs. 8,95,896.51 (while reducing the EMI)
- Interest savings: Rs. 26,53,842.47 (while reducing the tenure to 14 years and 6 months)
Putting these figures into the home loan prepayment calculator shows how three early payments cut both interest and years. You see that the extra Rs. 6,00,000 paid in the first two years drops the monthly EMIs by over Rs. 5,000 or shortens the term by about ten years, letting you clear the debt sooner at a far lower cost. Adjust the amount, timing, or frequency to test other plans and pick the one that fits your budget best.
This example is only for quick illustration. Please do your own calculation using the prepayment calculator.
Key features of the home loan prepayment calculator
The following are some of the important features of a home loan prepayment calculator:
- Accurate interest savings: Shows exactly how much interest you save, in rupees, after every extra payment you enter.
- EMI reduction: Using the home loan prepayment calculator, you can see a new, lower EMI within seconds for smoother monthly cash flow.
- Tenure reduction: The tool tells you the fresh end date straight away, so you know how many years you cut off.
- Flexible prepayment inputs: Add several prepayment amounts on dates you choose and watch their cumulative impact on interest and loan length.
- Instant results: Figures update in seconds on any device, helping you decide quickly without manual maths or sign-ups.
Benefits of using a home loan prepayment calculator
- Helps estimate the impact of prepaying on loan tenure: By using a prepayment calculator, borrowers can understand how making extra payments towards their home loan can reduce the overall tenure of the loan.
- Saves money on interest: It allows borrowers to see how prepayments can significantly reduce the total interest paid over the life of the loan, potentially saving them a substantial amount of money.
- Assists in financial planning: By providing a clear breakdown of how prepayments affect the loan balance and repayment schedule, borrowers can better plan their finances and decide on the most suitable prepayment strategy.
- Enables comparison of scenarios: Borrowers can use the calculator to compare different prepayment scenarios, such as varying prepayment amounts or frequencies, to determine the most beneficial approach for their financial situation.
- Empowers informed decision-making: Armed with the information provided by the prepayment calculator, borrowers can make well-informed decisions regarding their home loan prepayment strategy, optimizing their financial outcomes.
What is Part Payment in Home Loan?
Part payment in a home loan refers to making an additional payment towards the principal amount apart from regular EMIs. This reduces the outstanding loan balance, lowers interest costs, and helps in faster loan repayment. It is a useful option for borrowers looking to reduce their debt burden efficiently.
What is Home Loan Prepayment?
Home loan prepayment refers to the act of prepaying a part or all of the outstanding principal amount of a home loan before its scheduled due date. Essentially, it means making an early repayment of the loan amount either in part or in full before the tenure of the home loan comes to an end.
Prepayment can be done in two ways- full prepayment and partial prepayment. In full prepayment, the entire outstanding balance of the home loan is paid off in one go, while in partial prepayment, a certain amount is paid towards the principal outstanding.
Why Home Loan Prepayment is Important for Buyers
Paying off your home loan ahead of schedule through prepayments offers several key benefits:
- Interest savings:
Reduces the total interest paid over the loan tenure, resulting in significant savings. - Faster debt clearance:
Accelerates the journey to full homeownership, freeing you from debt sooner. - Financial freedom:
Allows for increased financial flexibility by eliminating a major financial obligation. - Improved credit score:
Demonstrates financial discipline, positively impacting your credit score. - Potential interest rate savings:
May open opportunities to negotiate lower home loan interest rates or refinance the loan. - Reduced stress:
Minimises long-term financial stress and uncertainty associated with debt. - Investment opportunities:
Creates room for investing in other avenues once the home loan burden is lifted. - Home equity build-up:
Accelerates the accumulation of home equity, increasing overall property ownership.
Eligibility for Home Loan Prepayment
Home loan prepayment eligibility depends on multiple factors set by lenders. Borrowers must check their loan agreement to understand prepayment terms. Typically, salaried and self-employed individuals with active home loans can prepay, subject to lender-specific conditions. Some lenders may impose a lock-in period before allowing prepayment, while others may charge prepayment penalties, especially for fixed-rate loans. Banks and NBFCs may also have minimum prepayment amounts. Using a Home Loan Prepayment Calculator helps assess the financial benefits before proceeding.
What are Home Loan Prepayment Charges?
When considering prepaying your home loan, it's crucial to understand the associated home loan charges. Some lenders impose prepayment penalties, especially on fixed-rate home loans, which can impact the overall savings from prepayment. These charges vary depending on the lender and loan type, so it's essential to review the terms carefully. If you're planning to prepay, check with your lender about these charges and how they apply to your loan.
Individual borrowers opting for a floating interest rate with Bajaj Finance can foreclose their entire home loan or make a partial prepayment without incurring any extra charges.
Important Links: What is Home Loan | Home Loan Eligibility Criteria | Documents Required for Home Loan | Home Loan Balance Transfer | Joint Home Loan | Home Loan Tax Benefits | Home Loan Subsidy
Should you reduce EMI or tenure?
While using the home loan prepayment calculator, you can either reduce the EMI payment or shorten the repayment tenure. Here’s how you can strike the right balance between EMIs and the repayment duration:
Lower EMI
- Ideal for: Individuals aiming for lighter monthly outgo.
- Benefits: Frees money for daily costs or new goals, though you pay interest for a longer period.
Shorter tenure
- Ideal for: Borrowers who wish to save more on interest and close the loan quickly.
- Benefits: Cuts years off the loan and saves a sizeable interest, letting you own the home sooner.
Try both paths on the home loan prepayment calculator. The quick results show which choice matches your budget and future plans.
When should you use the home loan prepayment calculator?
You can use the home loan prepayment calculator:
- During early loan years: Interest takes up most of each instalment in the early years. Running numbers through the home loan prepayment calculator shows how a single early payment slashes years and interest.
- After a windfall: Bonus, tax refund, or gift money can work harder when you push it into the loan. Check its impact first using the calculator.
- When comparing options: Before new goals or rate changes, enter different amounts to weigh a smaller EMI against a shorter term, and choose the mix that suits your budget.
- Regular checks: Keep reviewing figures; they help you repay smarter every year and faster, too.
Things to Consider Before Making Home Loan Prepayment
Making prepayments on a home loan can be a financially smart decision. It helps in reducing the outstanding principal amount, interest burden, and the repayment tenure. However, before making any prepayment, there are a few things that the borrower should consider. These include:
- Age: Assess your age and how many years you have left until retirement. If you're younger, prepaying early can help reduce long-term debt.
- Future cash requirements: Consider any upcoming expenses like education or medical costs to ensure you have sufficient liquidity even after prepayment.
- Tax savings: Evaluate how prepayment affects your tax deductions on home loan interest and principal repayments under Sections 24(b) and 80C of the Income Tax Act.
- Savings from prepayment: Calculate how much interest you’ll save by prepaying a portion of your loan. The more you prepay, the higher the savings.
- Investment opportunities: Compare the potential returns from investments against the savings from prepayment. If investments yield higher returns, consider allocating funds there.
- Home loan tenure: Shortening the tenure can help you become debt-free faster, while reducing EMI can provide greater monthly savings. Choose based on your financial goals.
Start saving with Bajaj Finserv Home Loan Prepayment Calculator today!
Use the home loan prepayment calculator to see real savings on interest and lighten your loan burden. Key in your figures, and the tool shows if cutting EMI or trimming tenure suits you better. Clear, quick results help you choose a plan that matches your budget and lets you repay smarter.
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Frequently asked questions
Prepayment refers to the early repayment of a loan. It is an instalment payment before its due date and is usually a lump sum amount. The minimum sum required to initiate the prepayment of your home loan with Bajaj Finserv is the equivalent of three of your EMIs. Since you pay a part of your dues before times, a prepayment can result in a reduced tenor or a reduction in your EMI amount.
No, Home loan part-prepayment calculator and Home loan EMI calculator both are used for different purpose. The part-prepayment calculator helps you to calculate your part-prepayment amount while the EMI calculator helps you to calculate your EMIs. This calculator can also be used for calculation of EMI with a prepayment option.
The Home Loan Part-Prepayment Calculator is a tool that shows the positive impact of early repayment of your loan.
All you need to do is simply enter your loan details and then enter the amount you wish to pre-pay. Do keep in mind that this amount will have to be at least three times the calculated EMI.
You can move the sliders to your left or right to adjust the values or you can directly type the values for the following:
- The loan amounts
- Tenor (In months)
- Rate Of interest
- The part pre-payment amount that you wish to pay
After you enter these details, click “Done”. You will be able to see two options:
- EMI saved: This table shows the reduction in your EMI and monthly savings in EMI post part pre-payment
- Tenor saved: This table shows the reduction in your tenor post part pre-payment.
Home loan prepayment comes with several benefits, such as reduced outstanding, reduced tenor, and smaller EMIs. In the long run, prepayments help you become debt-free earlier, which ultimately impacts your CIBIL Score positively.
When you prepay a part of your home loan, you have two options. You can either have your lender shorten the tenor, in which case you roughly pay the same amount as EMI, or you can continue with the same tenor, in which case your EMIs reduce.
It depends on the type of home loan interest rate. For example, Individuals with a floating interest rate home loan pay no extra charges on prepayment or foreclosure. On the other hand, fixed interest rate home loans attract a nominal fee on prepayment or foreclosure.
The home loan EMI calculator will help you calculate your EMIs by entering your loan amount, rate of interest, and tenure. While the prepayment calculator will help you calculate your new EMI after you do a part-prepayment.
Home loan repayment and prepayment refer to the same thing - payment of the outstanding principal amount of a home loan. However, the key difference between the two is the timing of the payment.
Home loan repayment refers to the payment of the EMI (Equated Monthly Installment) on the due date every month. The EMI consists of two components - principal and interest. The principal component repays the outstanding loan amount, while the interest component represents the cost of borrowing the loan. Every month, the outstanding principal amount reduces, and the interest component decreases based on the remaining principal amount.
On the other hand, home loan prepayment refers to the payment of the outstanding loan amount before the scheduled due date. Prepayment can be done in two ways - partial or full. In partial prepayment, a specific amount of the outstanding loan is paid before the scheduled date, while in full prepayment, the entire outstanding loan amount is paid off before the due date.
Prepayment helps in reducing the interest and principal component of the EMI in the ensuing months. When a borrower makes a prepayment, the outstanding principal amount reduces, and the interest due on the remaining balance decreases, which leads to lower EMIs or a shorter loan tenure.
In summary, while repayment is the scheduled payment of the principal and interest every month until the end of the loan tenure, prepayment is the early payment of a part or the entire outstanding loan amount before the scheduled due date.
Yes, you can repay your home loan early, providing benefits such as interest savings and loan closure. Before proceeding, check for prepayment charges in your loan agreement and explore options like partial or full prepayment. Consider your financial goals, tax implications, and the current interest rate environment.
Repaying the loan early can be advantageous as it reduces interest costs and accelerates debt freedom. However, consider potential prepayment penalties and weigh against other financial goals before deciding. You can learn more on home loan FAQs on our website.
The home loan calculator can typically be used multiple times, allowing you to evaluate various scenarios and make informed decisions about loan terms, payments, and affordability.
Paying two additional EMIs each year is similar to making a steady part-prepayment, resulting in lower overall interest payment and shorter repayment duration. These additional payments accelerate the principal reduction, and in turn help you close the loan faster while saving a significant amount on the interest component.
Let us look at the benefits in greater detail:
- Reduced loan tenure: Extra payments knock down the principal faster, letting you close the loan years ahead of schedule.
- Lower interest costs: Because interest is charged on a smaller principal, you save a sizeable sum over the life of the loan.
- Higher loan eligibility: Clearing the debt sooner improves your credit profile and leaves room for a future loan if needed.
- Greater financial freedom: Once the loan ends early, you can divert money to investments, children’s education, or retirement goals.
The simplest way is to raise your EMI whenever your income allows. A higher monthly payment attacks the principal directly, shrinking it faster and reducing the interest that builds up over time. Review your budget, then ask the lender to revise the EMI upward or opt for the annual step-up facility that many lenders offer. You can also channel bonuses or windfalls into one-off part-prepayments, but a steady EMI increase delivers the biggest, most predictable savings without needing fresh paperwork each time.
Choose higher EMIs if your income is stable and you can handle a larger fixed outflow every month. A bigger EMI chips away at the principal from day one, yielding maximum interest savings. Choose part-prepayments when cash flow is uneven—say, you rely on commissions or seasonal income. In that case, you keep the regular EMI comfortable and push surplus funds into the loan whenever they appear. Both paths cut costs, but steady EMI hikes usually win on total interest saved, while ad-hoc prepayments offer greater flexibility.
Prepaying a home loan is not risk-free. Fixed-rate loans often carry a prepayment charge of about 1–3 percent on the amount you pay early, cutting into the savings you expect. A big lump-sum payment also ties up cash you might need for emergencies or higher-return investments, so your liquidity drops. Once the loan balance falls, you lose the tax deduction on interest, which can lift your yearly tax outgo. If interest rates later rise, you may regret giving up a low-cost loan too soon.
Every year, borrowers can prepay up to 25% of the outstanding principal amount without worrying about prepayment charges. However, there are certain caveats, such as making the prepayment using your own funds instead of borrowing it from another lender. Certain lenders also allow a minimum prepayment amount, often ranging between Rs. 25,000 and Rs. 50,000. Here are some more details:
- Annual limit: Many lenders let you prepay up to 25 percent of the outstanding principal each financial year without penalty.
- Own funds only: The money must come from your own resources, not another loan.
- Minimum amount: Lending institutions often set a minimum of Rs. 25,000 or Rs. 50,000 per prepayment.
- Charges: Floating-rate loans avoid penalties, while fixed-rate loans may attract 1–5 percent on the prepaid sum.
- Frequency: After a six-month lock-in (typically), you may make multiple prepayments, each shrinking either the EMI or the term and saving interest.
Treating a single month’s instalment as an extra payment directly lowers your principal ahead of schedule.
- Reduced loan tenure: One extra EMI each year can shave several months off the total term.
- Lower interest costs: A smaller principal means every later EMI carries less interest, so you pay less overall.
- Quicker debt-free status: The loan ends sooner, freeing cash for other goals.
- Ideal use of bonuses: Annual bonuses or incentives can fund the extra EMI without straining monthly cash flow.
Even this modest step offers meaningful savings and speeds up loan closure.
