Home loan prepayment calculator: reduce EMI or tenure?
Works for a one-time part prepayment, a monthly top-up, or both. Enter your outstanding loan and a prepayment plan. See exactly how much interest you save and how many EMIs disappear. The RBI raised the repo rate to 5.50% in October 2026, so many floating-rate borrowers are seeing EMIs or tenures rise. Prepayment is the direct counter.
Why early prepayment is so powerful
A home loan EMI is front-loaded with interest. On a ₹50 lakh loan at 8.5% over 20 years, more than 80% of the first EMI goes to interest. Every rupee of principal you clear early removes interest that would otherwise be charged on it for every remaining month.
That is why a single ₹5 lakh prepayment in the first year can wipe out several years of EMIs, while the same amount paid near the end barely changes anything.
A simple habit that works
Many borrowers prepay once a year, from a bonus or a tax refund, and keep the EMI unchanged. Others add a small fixed amount to every EMI. Both work. Try each in the calculator and pick the one you will actually stick with. And keep an emergency fund of six months of expenses before you prepay; money paid into a loan is hard to get back.
Follow repo rate changes on our RBI repo rate tracker. Most new floating home loans are linked to it.
Questions people ask
Should I reduce my EMI or my tenure after prepaying?
Reducing tenure saves far more interest, because you keep paying the same EMI and the loan ends sooner. Reducing EMI eases your monthly cash flow but saves less. If your budget is comfortable, choose tenure. The calculator shows both.
Is there a penalty for prepaying a home loan?
RBI rules do not allow banks and housing finance companies to charge prepayment penalties on floating-rate home loans taken by individuals. Fixed-rate loans can carry a charge, so check your loan agreement.
When is prepayment most effective?
Early in the loan. In the first years most of each EMI goes to interest, so every rupee of principal you clear early saves interest for the longest time. A prepayment in year two saves much more than the same amount in year fifteen.
Should I prepay or invest instead?
Compare your loan rate after tax with what you realistically expect to earn after tax. Prepaying gives a guaranteed return equal to your loan rate. Investing may earn more but carries risk. Many people do some of each, and keep an emergency fund before doing either.
Does prepayment affect my tax benefit?
Under the old regime, interest on a self-occupied home is deductible up to ₹2 lakh a year. Prepaying lowers your interest, so the deduction may shrink if you were near that limit. Under the new regime, this deduction does not apply to a self-occupied home, so there is nothing to lose.