Home Loan Prepayment
Calculator

📊 Your loan, year by year (keep EMI, cut tenure)

Monthly reducing balance; the yearly part payment is applied after the 12th EMI of each year.

How much interest does a home loan prepayment save?

A one-time part payment saves the most when it is made early, because early EMIs are mostly interest. On a ₹50.00 L home loan at 8.5% for 20 years (EMI ₹43,391, total interest ₹54.14 L), keeping the EMI unchanged after the prepayment:

Illustration at 8.5%; your lender's rate and how it applies the payment will change the exact figures. Interest saved is against the same loan with no prepayment.

Reduce EMI or reduce tenure after a part payment?

Reduce tenure if you can afford the current EMI: it saves more interest. After a part payment most lenders let you choose. Keep the EMI, and the extra principal repaid shortens the loan; or keep the closing date, and the lender re-sets a lower EMI over the months left. With ₹1.00 L prepaid at the end of every year on the same ₹50.00 L loan:

Cutting the EMI is the right choice when monthly cash flow is tight, or when the money freed up goes into an investment you expect to earn more than the loan rate. Compare that return with the SIP calculator, and see what the loan does to your overall picture in the net worth calculator.

Home loan prepayment charges: what RBI allows in 2026

No charges on a floating-rate home loan you took as an individual. Under the RBI (Pre-payment Charges on Loans) Directions, 2025, banks (other than payments banks), co-operative banks, NBFCs and All India Financial Institutions cannot charge for prepaying a floating-rate loan given to an individual for a non-business purpose. This applies to loans sanctioned or renewed on or after 1 January 2026, to part and full prepayment alike, whatever the source of the money, with no minimum lock-in period.

• Older floating-rate home loans from banks were already covered by earlier RBI circulars (June 2012 for home loans, May 2014 for floating-rate term loans), which the 2025 Directions replace.
• Fixed-rate loans: any charge follows the lender's own approved policy, but it must be calculated on the amount prepaid.
• A dual-rate (fixed then floating) loan is treated by the rate it is on when you prepay.
• No charge can be levied unless it is disclosed in the sanction letter, the loan agreement and the Key Facts Statement, and none when the lender itself asks for the prepayment.

Primary source: Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, RBI/2025-26/64, DoR.MCS.REC.38/01.01.001/2025-26, 2 July 2025, paragraphs 3–10 and Annex (read on rbi.org.in, 21 October 2026). EMI and interest figures are computed by this calculator.

Last updated: 21 October 2026

Home loan tax benefit: Section 24 interest and 80C principal

Under the old tax regime, interest on a loan for a home you live in is deductible up to ₹2,00,000 a year (Section 24(b)), and the principal part of the EMI counts towards the ₹1,50,000 Section 80C limit. The new regime gives no deduction for a self-occupied home.

• Let-out property: the full interest is deductible against the rent, after a 30% standard deduction on the net annual value; a resulting loss can be set off against other income only up to ₹2,00,000 a year in the old regime, with the rest carried forward.
• Under construction: interest paid before completion is claimed in five equal instalments from the year construction finishes, within the same ₹2,00,000 cap for a self-occupied home.
• Joint loans: co-owners who are co-borrowers can each claim their own share, each up to the ₹2,00,000 cap.

Prepaying in the early years cuts the interest you could have deducted, so compare the tax you lose with the interest you save. In the first years of a long loan the interest often exceeds ₹2,00,000 anyway, and the part above the cap brings no tax benefit.

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