Loan Prepayment Calculator

When to Choose Tenure Reduction

• Your regular monthly salary/cash flow comfortably accommodates the current EMI.
• Your primary objective is minimizing total lifetime finance costs.
• You want to achieve debt freedom before major milestones (e.g. child education, retirement).
• Highest compounded interest savings over the life of the loan.

When to Choose EMI Reduction

• Household monthly budget is tight, or living expenses have escalated.
• You are transitioning careers, starting a venture, or anticipating income variability.
• You want to improve your debt-to-income (DTI) ratio to qualify for other credit facilities.
• Provides immediate cash flow relief every single month.

Prepayment Penalty Rules

Under Reserve Bank of India (RBI) regulations, banks and HFCs cannot levy foreclosure or prepayment charges on floating-rate individual home loans. However, fixed-rate loans and commercial facilities may carry penalties (2%–4%).

Lender Processing Guidelines

Lenders frequently specify minimum prepayment thresholds (such as minimum 1 or 2 EMIs or ₹10,000–₹25,000) and may restrict the frequency of partial payments per financial year.

Tax Shield Considerations

Under the Old Tax Regime in India, Section 24(b) permits interest deduction up to ₹2,00,000 for self-occupied property. Substantially shrinking loan interest reduces this tax shield, which should be factored into net savings.

Guaranteed vs. Equity Returns

Prepaying an 8.5% loan yields a guaranteed, tax-free return of 8.5%. Compare this risk-free hurdle rate against alternative long-term investment options before deploying surplus capital.