₹5 Lakh Home Loan Prepayment Impact
Interest saved and tenure reduced by prepaying ₹5 lakh on a ₹50 lakh loan. Based on a ₹50 lakh loan at 8.5% interest for 20 years.
₹50 lakh
at 8.5% p.a. for 20 years
₹5 lakh
Lump sum in month 12
₹16.04 L
Total interest falls from ₹54.14 L to ₹38.10 L
4 years
Loan ends in 16 years instead of 20 years
Strategic Insights for ₹5 Lakh Home Loan Prepayment Impact
- For a ₹50 lakh loan at 8.5% interest over 20 years, the monthly EMI is ₹43,391.
- Prepaying ₹5 lakh in month 12 saves ₹16,03,691 in total interest.
- Your loan ends 4 years early (48 fewer EMIs): it is paid off in 16 years instead of 20 years.
- RBI rules do not allow a prepayment penalty on floating-rate home loans taken by individual borrowers.
Simulate Your Prepayment Scenario
Loan Prepayment Calculator 2026
Calculate the interest saved and tenure cut by a part payment (lump sum) or recurring prepayments on a home, car or personal loan, whether you are planning the loan or already paying it.
Planning a loan, or working from day one: enter the loan amount and the full tenure.
No prepayment charge on a floating rate loan taken for personal use and sanctioned or renewed from 1 January 2026 (RBI rules). For an older loan, check your loan agreement.
Pay lump sums when you have spare money, such as a bonus, or a fixed extra amount every month, quarter or year.
You can add one lump sum for each year of the loan.
Banks shorten the loan and keep the EMI unless you ask otherwise. Reducing the EMI keeps the end date and saves less interest.
- Interest saved
- ₹16.04 L
- And you finish 4 years earlier.
Same payments, two choices
Shorter tenure
Your choice
Saves ₹16.04 L
Ends 4 years sooner
Lower EMI
Saves ₹5.09 L
EMI ₹38,964, was ₹43,391
- Monthly EMI
- ₹43,391
- Total Extra Paid
- ₹5.00 L
Baseline vs With Prepayment
Without prepayment
- Tenure
- 240 months
- Total interest
- ₹54.14 L
- Total payment
- ₹1.04 Cr
With prepayment
- Tenure
- 192 months
- Total interest
- ₹38.10 L
- Total payment
- ₹88.10 L
Outstanding balance over time
Year-by-year breakdown
- Year 1
- EMI paid
- ₹5.21 L
- Extra paid
- ₹5.00 L
- Interest
- ₹4.21 L
- Principal
- ₹6.00 L
- Closing balance
- ₹44.00 L
- Year 2
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹3.68 L
- Principal
- ₹1.53 L
- Closing balance
- ₹42.48 L
- Year 3
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹3.55 L
- Principal
- ₹1.66 L
- Closing balance
- ₹40.82 L
- Year 4
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹3.40 L
- Principal
- ₹1.81 L
- Closing balance
- ₹39.01 L
- Year 5
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹3.24 L
- Principal
- ₹1.97 L
- Closing balance
- ₹37.05 L
- Year 6
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹3.07 L
- Principal
- ₹2.14 L
- Closing balance
- ₹34.91 L
- Year 7
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹2.88 L
- Principal
- ₹2.33 L
- Closing balance
- ₹32.58 L
- Year 8
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹2.67 L
- Principal
- ₹2.54 L
- Closing balance
- ₹30.04 L
- Year 9
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹2.45 L
- Principal
- ₹2.76 L
- Closing balance
- ₹27.28 L
- Year 10
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹2.20 L
- Principal
- ₹3.00 L
- Closing balance
- ₹24.28 L
- Year 11
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹1.94 L
- Principal
- ₹3.27 L
- Closing balance
- ₹21.01 L
- Year 12
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹1.65 L
- Principal
- ₹3.56 L
- Closing balance
- ₹17.46 L
- Year 13
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹1.34 L
- Principal
- ₹3.87 L
- Closing balance
- ₹13.58 L
- Year 14
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹99,292
- Principal
- ₹4.21 L
- Closing balance
- ₹9.37 L
- Year 15
- EMI paid
- ₹5.21 L
- Extra paid
- —
- Interest
- ₹62,044
- Principal
- ₹4.59 L
- Closing balance
- ₹4.78 L
- Year 16
- EMI paid
- ₹5.00 L
- Extra paid
- —
- Interest
- ₹21,503
- Principal
- ₹4.78 L
- Closing balance
- ₹0
| Year | EMI paid | Extra paid | Interest | Principal | Closing balance |
|---|---|---|---|---|---|
| Year 1 | ₹5.21 L | ₹5.00 L | ₹4.21 L | ₹6.00 L | ₹44.00 L |
| Year 2 | ₹5.21 L | — | ₹3.68 L | ₹1.53 L | ₹42.48 L |
| Year 3 | ₹5.21 L | — | ₹3.55 L | ₹1.66 L | ₹40.82 L |
| Year 4 | ₹5.21 L | — | ₹3.40 L | ₹1.81 L | ₹39.01 L |
| Year 5 | ₹5.21 L | — | ₹3.24 L | ₹1.97 L | ₹37.05 L |
| Year 6 | ₹5.21 L | — | ₹3.07 L | ₹2.14 L | ₹34.91 L |
| Year 7 | ₹5.21 L | — | ₹2.88 L | ₹2.33 L | ₹32.58 L |
| Year 8 | ₹5.21 L | — | ₹2.67 L | ₹2.54 L | ₹30.04 L |
| Year 9 | ₹5.21 L | — | ₹2.45 L | ₹2.76 L | ₹27.28 L |
| Year 10 | ₹5.21 L | — | ₹2.20 L | ₹3.00 L | ₹24.28 L |
| Year 11 | ₹5.21 L | — | ₹1.94 L | ₹3.27 L | ₹21.01 L |
| Year 12 | ₹5.21 L | — | ₹1.65 L | ₹3.56 L | ₹17.46 L |
| Year 13 | ₹5.21 L | — | ₹1.34 L | ₹3.87 L | ₹13.58 L |
| Year 14 | ₹5.21 L | — | ₹99,292 | ₹4.21 L | ₹9.37 L |
| Year 15 | ₹5.21 L | — | ₹62,044 | ₹4.59 L | ₹4.78 L |
| Year 16 | ₹5.00 L | — | ₹21,503 | ₹4.78 L | ₹0 |
When you pay matters
The same ₹5.00 L paid in different years. Paying earlier saves more interest, because the money stops interest from building for longer.
- Year 1₹16.04 L
- Year 3₹13.20 L
- Year 5₹10.69 L
- Year 10₹5.71 L
- Year 15₹2.22 L
Paying in year 1 instead of year 15 saves ₹13.82 L more.
Worked example
Say you take a home loan of ₹50.00 L at 8.5% for 20 years. Your EMI is ₹43,391. If you only ever pay the EMI, you pay ₹54.14 L as interest over the full term.
At the end of the first year you get a bonus and pay ₹5.00 L extra towards the principal. You keep paying the same EMI. The loan now ends 4 years sooner and the total interest falls to ₹38.10 L. That is ₹16.04 L you no longer pay.
If you ask the bank to lower the EMI instead, the EMI drops to ₹38,964 and the loan still ends on the original date. You save ₹5.09 L. A shorter tenure saves more, because the full EMI keeps going towards a smaller balance.
Now say the loan is on a fixed rate and the lender charges 2% on the amount prepaid. The charge is ₹10,000, so the saving after the charge is ₹15.94 L. On a floating rate loan for personal use sanctioned or renewed from 1 January 2026, there is no charge at all.
Already paying a loan? The same steps work from today. Choose Existing loan, enter the balance from your latest loan statement and the years left, and add each lump sum in the month you expect to pay it, for example a yearly bonus. The calculator adds up every payment and shows what you save in total.
Loan Prepayment Savings Formula & Live Calculation
Prepayment reduces the active principal balance directly. Because monthly interest is calculated as `Remaining Principal × (Annual Rate / 12)`, lowering principal shaves off interest for all future remaining EMI periods.
About the Loan Prepayment Calculator
Paying part of your loan early is one of the safest ways to save money. Every rupee of principal you clear stops charging interest for the rest of the loan. This calculator shows how much you save, how much sooner the loan ends, and how much a prepayment charge takes away if your lender has one.
What it covers: a new loan or one you are already paying, up to one lump sum for each year of the loan, or a regular extra amount every month, quarter or year. It shows both choices a bank gives you after a prepayment, a shorter tenure or a lower EMI, side by side. You also get a year by year table you can download as a CSV file, and a chart of how the saving changes with the year you pay.
How it Works
- Your loan: choose New loan to enter the loan amount and full tenure, or Existing loan to enter the outstanding balance and the years left.
- Loan type: a floating rate loan for personal use sanctioned or renewed from 1 January 2026 has no prepayment charge. For a fixed rate loan, enter the charge from your sanction letter.
- Extra payments: add lump sums with the month you plan to pay each one, or a fixed extra amount every month, quarter or year.
- Reduce: pick a shorter tenure or a lower EMI. The result shows what you save with both.
Part payment or full closure?
A part payment clears some of the principal and the loan carries on with a smaller balance. Full closure, also called foreclosure, pays off everything that is left. Both save interest. On a floating rate loan for personal use, sanctioned or renewed from 1 January 2026, the lender cannot charge for either.
What this calculator assumes
- The interest rate stays the same for the whole loan. A floating rate changes when the bank resets it, so treat the result as a guide.
- Each extra payment goes to the principal right after that month's EMI.
- When you choose a lower EMI, the new EMI is worked out over the months left after each payment.
- For an existing loan, the EMI is worked out from the balance and the years left. If it does not match the EMI on your statement, change the years left until it does.
- Banks round EMIs and interest in their own way, so your statement can differ by a few rupees.
Not sure whether to prepay or invest the money? Compare with the Prepay vs SIP calculator
References
Loan Prepayment FAQs
Is part payment the same as prepayment?
Are there prepayment charges on home loans in India?
Is it better to reduce EMI or reduce tenure when making a prepayment?
When is the best time during the loan tenure to make a prepayment?
How does lump-sum prepayment compare with monthly top-up prepayments?
Does prepaying a loan affect Section 24(b) home loan tax deduction?
Do the RBI 2025 prepayment directions cover a loan I took in 2019?
How do I confirm the bank applied my prepayment to principal and not to future EMIs?
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How to Recover Home Loan Interest with SIP (and When It Fails)
SIP to recover home loan interest: ₹5,500 a month on ₹50L, ₹10,900 on ₹1 crore (8.5%, 20 years, 12% return). Table from ₹25L to ₹1.5Cr, plus the 8% case.